Markets Right Now: US stocks gain as Fed stays put on rates

Some analysts thought the central bank would take further steps to bolster economic growth, which would have weakened the yen.

Bullion remains highly exposed to United States interest rates and a move by the Fed is widely expected to trigger selling pressure on the commodity. But the vote wasn’t unanimous.

Fed Chair Janet Yellen had a simple explanation for why the Fed didn’t raise rates: the economy can still grow without hurting itself. Now, dissent is rising.

“The Fed appears to be firmly on track for a December hike”, Paul Ashworth, chief U.S. economist at Capital Economics, said after the statement was issued. The last time there were three dissenters was in December 2014.

“There is some consolidation after the very active and positive week for stocks based on news flow from the central banks, said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management”. That’s just a week before the presidential election.

Last December, the Fed signaled that four rate increases were likely in 2016, but that was scaled back in March due to a global growth slowdown, financial market volatility and concerns about tepid U.S. inflation. It raised rates a year ago for the first time in almost a decade.

At the time, it forecast four additional rate increases this year.

Real estate companies rose as investors looked for income, as did telecom stocks, which also typically pay higher-than-average dividends.

Such shifting amplifies the concerns that the Fed is losing credibility, and its members are pushing back.

If that is the case, she added, the Fed will “simply stay on the current course” of higher lending levels.

Yellen also pushed back against criticism that the Fed is losing any credibility, arguing that it’s good all Fed officials don’t have the same opinion and there’s a range of voices.

“If we had not received these mixed messages, I don’t think anybody would have been surprised”, said Sam Stovall, U.S. equity strategist for S&P Capital IQ.

Investors did not appear to significantly shift their bets on the timing of the next rate hike.

Earlier on Wednesday, the spot gold price had also received a boost after the Bank of Japan maintained its 0.1-percent negative interest rate and overhauled its monetary stimulus programme.

The jury is still out on whether the Fed will deliver a long-speculated increase in December, pushing Treasury yields to their biggest decline in weeks and the dollar to a half percent loss for the week.

But that hardly changed the market’s perception on the outlook of the Fed’s policy, with interest rate futures pricing in roughly a 60 percent chance of a rate increase by December, little changed from before the Fed meting.