The Dow Rose 108 Points Because the Fed Didn't Spook the Market

Michael Haddad

Another Good Day. All three major indexes held on to gains made early on Tuesday through the close. Even the Nasdaq Composite –badly rocked by the “tech tornado” in recent weeks–managed to end with its toes in the black. In today’s After the Bell, we…

…learn what Fed Vice Chair Richard Clarida said in today’s speech;

…see why a wobbly market might not be enough to change the Fed’s decision;

…and watch a certain utility zoom higher.

The Good, the Bad, and the Neutral

It’s been a second day of market gains after weeks of turmoil. It seems that the oversold condition is enticing some investors to buy the dip.

The Dow Jones Industrial Average rose 108.49 points, or 0.4%, to 24,748.73. The S&P 500 gained 8.72 points, or 0.3%, to 2682.17, and the Nasdaq Composite inched up 0.85 points, or 0.01%, to 7082.70.

There was a sign of some fear: The 10-year Treasury yield has fallen to 3.06% from 3.23% earlier this month as investors take up refuge in Treasuries.

Fed Vice Chairman Richard Clarida gave a speech this morning, reiterating the central bank’s previous stance that future Federal Open Market Committee policy will depend on upcoming U.S. economic data and two questions around them. What is the “maximum” unemployment rate that boosts workers income without causing margin pressure? What is the “neutral” real interest rate that curbs inflation without causing a recession?

Clarida said FOMC members have revised their estimates of the ideal levels “substantially lower” over the past seven years, as unemployment and the real interest rate continue to fall, but inflation remains in check.

The uncertainty surrounding these data points and FOMC members’ oscillating views can make the direction of monetary policy “quite sticky,” writes Michael

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