Big thumbs-up from Wall St after Fed signals patience on rates

Big thumbs-up from Wall St after Fed signals patience on rates

The Federal Reserve said it will be "patient" on any future interest-rate moves and signaled flexibility on the path for reducing its balance sheet, in a substantial pivot away from its bias just last month toward higher borrowing costs.

The Philadelphia Semiconductor index rose about 1.64 percent, while the S&P technology index gained 2.00 percent.

In an expected move, the US Federal Reserve held interest rates steady on Wednesday. Concerns about the pace of rate increases, which can make borrowing more expensive and cool off economic growth, had previous year sent stock markets into a tailspin.

"We are now facing a somewhat contradictory picture of generally strong USA macroeconomic performance alongside growing evidence of cross-currents".

In his news conference, Powell said the Fed's key priority was to sustain the economic expansion. Powell's press briefing on Wednesday inaugurates a new approach of briefing the media after every meeting of the FOMC - eight times a year - instead of every other meeting. He termed the Fed's new posture one of "wait and see", not necessarily a hard stop on rate increases.

"The case for raising rates has weakened somewhat", Powell told reporters Wednesday at the conclusion of the Federal Open Market Committee's first two-day meeting of 2019.

However, while market expectations for Fed tightening may have waned significantly, some analysts suggested rate hikes still remained a near-term possibility.

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After the release of the Fed's statement, US stocks added to gains, with the S&P 500 index ending the day about 1.5 percent higher, while the dollar and short-term yields fell as investors gauged an even lower probability of additional rate hikes any time soon. U.S. corporate results have shown companies including Apple, Intel Corp and Caterpillar Inc are feeling pain from the slowing expansion of China's economy, which has been hurt by a trade conflict with the United States.

The economic outlook, however, has become more clouded as a result of recent volatility in financial markets and signs that growth is slowing overseas, including in China and the euro zone.

The Fed is also assessing the impact of the partial government shutdown that ended last week but that has still shaken consumer confidence and created uncertainty for businesses and financial markets.

The central bank also said it would be ready to alter the balance sheet's size and composition if the economy warrants a looser monetary policy than the federal funds could achieve on its own.

In a separate statement, the Fed said it had chose to continue managing policy with a system of "ample" reserves, reinforcing the notion that the rundown may end sooner than expected.

The statement removed a long-standing reference to future rate hikes, saying only that it would continue to rely on data for future decisions, and referenced muted inflation in recent months, but reiterated that the USA economy remains on solid footing.

With the Fed decision out of the way, investors focused their attention on a pivotal round of high-level U.S.

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