The Fed just decided to maintain interest rates but the stock market dropped. Why?

Question

It seems like that would have raised the market despite worries about future inflation. Although worries about future inflation and thus future rate increases could be present, it seems as if a pause from hikes should not cause the market to drop suddenly. Is there something I missed? Did Bernanke hint at future hikes in his speech or something?

Answer 1

The market had discounted the rate pause in advance, and hinted at it, IMHO, by the fact that the US securities, the 30 yr, 10 yr, & 5 yr rates all had eased off and developed a downward bias in momentum in the last 2 1/2 weeks.
The market was in fact supported by the HOPE that a FED pause would happen, and in fact the last price rises were discounting that HOPE. So when the HOPE became REALITY, it was back to the ugly facts that are confronting the broad market at this point.

Answer 2

The expectation of the stock already priced in couple weeks ago when the GDP report at 2.5%. The economists and wallstreet already have expectation. with the weak seasonal of the market cycle AUG,sept,OCT usually bad for stock with heavy resistence. generally, wallstreet hates directionless FED, and they need the assurance that the FED stop increase for good., but inflation still pretty much in the picture and the next meeting the FED may or ay not raise. The wall street hated that

check this book Traders Almanac by Jeff Hirsch.

Answer 3

The Fed also hinted that there was still some risk of inflation and might continue raising rates in the future.

Answer 4

It would not continuously. in fact each and every each and every now and then it does the alternative. every time information is introduced and the industry is going up or down that regulate reflects the adaptation between what the industry theory could take place and what rather got here approximately. that's authentic of rates of pastime, customer self assurance stages, fee indexes, elections, etc. Say the industry theory rates have been going to be larger by utilising a million/2% and fell fairly as a results of fact the cost statement strategies however the cost is rather larger by utilising a million/4%. The industry could bounce decrease back up in reaction. many times larger rates of pastime are a drag on companies and function a tendency to inspire much less spending by utilising purchasers. yet larger rates of pastime additionally save inflation in examine and inflation could be undesirable for specific companies as nicely. basically as important as a results of fact the Fed's value variations is the verbage that accompanies the statement as that has a tendency to characterize what's going to take place next time as nicely.

Answer 5

The fed stopped raising rates because the economy is slowing. The market would have probably sold off either way.

Answer 6

i wondered the same thing.. you never know when good news is good news, or good news is bad news... the friggin market is schizophrenic.