FOMC Drives Financials, Broader Market Higher
Dow +90.88 at 7486.58, Nasdaq +29.11 at 1491.22, S&P +16.27 at 794.22
[BRIEFING.COM] The latest policy statement from the Federal Open Market Committee (FOMC) enticed buyers to enter the bidding process and push stocks markedly higher. Buyers rallied around financial stocks, which yet again helped provide leadership to the broader market.
The FOMC is maintaining a target fed funds lending rate within the range 0.00% to 0.25%, as predicted. Exceptionally low levels are expected for an extended period.
The Fed will bolster its balance sheet by buying up to $300 billion of Treasuries during the next six months. The 10-year Note surged on the news; it finished almost 4 points higher, pushing its yield down to a two-month low of 2.55%.
Asset purchases didn't end there, though. The Fed will purchase an additional $750 billion of agency mortgage-backed securities this year, bringing the total to $1.25 trillion.
An additional $100 billion of agency debt will also be purchased this year, bringing the total to $200 billion.
News the Fed will be expanding its balance sheet weighed on the Dollar Index, which lost 2.7% as it fell to its lowest level since late January.
Still, the Fed's decision to purchase so many of these assets is aimed at helping stimulate the flow of credit and creating demand for the assets.