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Investment expert Doug Fabian analyzes why Fed's no rate hike decision boosts stock market significantly.


No Rate Hike Decision Boosts Stock Market

Investment expert Doug Fabian analyzes why Fed’s no rate hike decision boosts stock market significantly.

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The big news event this week came from Fed Chair Janet Yellen and her band of central bankers, who opted to leave interest rates alone, as was widely expected.

The Federal Open Market Committee (FOMC) also changed some verbiage in its official September meeting statement, and those changes also were widely anticipated.

Here‚??s one of the key lines from the FOMC statement:

“The committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.”

The Fed always wants to make sure it has an ‚??out‚?Ě in case the ‚??further evidence‚?Ě is negative enough for them to hold off once again. But as of today, the market is pegging the chances of a December hike at 50-50.

Another key line in the statement was that the Fed now thinks that ‚??near-term risks to the economic outlook appear roughly balanced.‚?Ě That is Fed code for yes, we will hike rates in December, so be ready, Mr. Market.

While we may get a rate hike in December, for now the market has breathed a sigh of relief that there were no surprises in the Fed statement. The result was a strong relief rally on Wednesday and Thursday that sent stocks up nicely on the week.


Today, stocks have pulled back a bit, and that is to be expected after the gains over the prior two trading sessions. And while stocks remain in an uptrend, trading near their all-time highs, there are plenty of reasons to feel uneasy about this market.

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Written By

Doug Fabian is the editor of Successful Investing and High Monthly Income, and is the host of the syndicated radio show, "Doug Fabian's Wealth Strategies." Taking over the reigns from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert‚??s Investment Digest. For more than 30 years, Successful Investing (formerly the Telephone Switch Newsletter) has produced double-digit annual gains. Doug has become known for his expert knowledge and timely use of innovative tools like Exchange Traded Funds, bear funds and Enhanced Index funds to profit in any market climate.