Stocks fall as Fed fails to offer fresh cause for cheer

TOKYO (Reuters) – Stocks fell and the dollar advanced on Thursday after the Federal Reserve pledged to keep interest rates low for a long time but stopped short of offering further on stimulus to shore up a battered U.S. economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.82%, running out of steam after five straight days of gains. Japan’s Nikkei shed 0.45%.

U.S. S&P 500 futures fell 0.87% in Asia on Thursday following a 0.46% drop in the S&P 500 on Wall Street.

Tech shares fared worse, with the Nasdaq Composite dropping 1.25% on Wednesday. Nasdaq futures dropped 1.13% in Asia.

The Fed said it would keep interest rates near zero until inflation is on track to “moderately exceed” the central bank’s 2% inflation target “for some time.”

New economic projections released with the policy statement showed most policymakers see interest rates on hold through to at least 2023, with inflation never breaching 2% over that period.

“Of course, sensible people wouldn’t really hold anyone to macro forecasts that far out so we’ll cross that bridge when we get to it,” said Derek Holt, head of capital markets economics at Scotiabank in Toronto.

“Nevertheless, markets are priced for basically one outcome here and that is little inflation and no hikes for years to come.”

Still, with such expectations already long considered as a foregone conclusion by many investors, there was some disappointment in the market.

“By and large the Fed delivered the minimum of what had been expected by markets with a key focus on the implications of a move to ‘flexible’ inflation targeting,” said Stephen Miller, investment strategist at GSFM in Sydney.

The 10-year U.S. Treasuries yielded 0.685%, a few basis points above its levels before the Fed.

The U.S. dollar gained against most other currencies.

The euro dropped 0.4% to $1.1767 while the Australian dollar lost 0.35% to

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