Wall St. surges as Fed statement relieves rate worries

It was another totally irrational day on Wall Street.  After all the brouhaha during the last few weeks of how the sky was going to fall in if the Fed removed the word "patient" from its policy statement today, when that indeed happened, instead of calamity there was ecstasy with the Dow exploding a whopping 227 points.  The daily chart was quite interesting as things dropped like a rock 150 points right out the gate this morning and stayed there until the Fed announcement at 2 pm, then went crazy in the other direction.  Why the jubilation over a move everyone had been dreading?  It was because the Fed's March statement surprised everyone by actually being a very smart one.  In addition to removing the word "patient" and thus allowing itself some breathing room, the central bank also issued a fairly declarative statement "sending a clear signal that it was in no hurry to push rates higher" while offering additional reassurances of its firm acknowledgement that the economy was "growing only moderately."  It was exactly what everyone wanted to hear despite the feared editing of patience.  Though there are still those who believe an interest rate hike might come as early as June, most now believe that the soonest we will see action is September.  This is why I call it irrational.  Until today, the expectation was October and the great fear that had been so severely roiling the market was that it would come much earlier.  Mind you, the Fed gave no date, nor any indication of any date other than that there would likely be no announcement in April either.  All the Fed said was there was no hurry, which is exactly consistent with all of its statements in the last couple years.  But now investors are elated by the assumption that the hike won't occur until September, just one month sooner than previously assumed.  So the market soared.  Crude oil also rallied, the dollar dropped, and the energy index added almost 3%.  Volume was exceptional at 7.9 billion shares.

Wall St. surges as Fed statement relieves rate worries

BY CAROLINE VALETKEVITCH

DJ:   18,076.19  +227.11     NAS:   4,982.83  +45.39     S&P:    2,099.50  +25.22

NEW YORK Wed Mar 18, 2015 5:05pm EDT

(Reuters) - U.S. stocks rallied on Wednesday after the Federal Reserve suggested a less aggressive timeline for raising interest rates even as it opened the door for the first hike in almost a decade.

The Fed dropped its pledge to be "patient" in deciding when to begin raising rates, but it cut its interest-rate projections over the next few years and downgraded its outlook for the U.S. economy.

While the statement put a June rate increase on the table, it also allowed the Fed flexibility to move later, stressing that any decision would depend on incoming data.

All 10 S&P sectors were higher on the day, with the S&P 500 ending within 1 percent of its record close set earlier this month. Stocks had been trading lower ahead of the Fed announcement.

"By lowering its expectations for the pace at which rates will rise, it sent a clear signal that it is in no hurry to push rates higher as it views the economy as growing only moderately," said David Joy, chief market strategist at Ameriprise Financial in Boston.

Energy shares surged as crude oil rallied and the dollar dropped. The S&P energy index .SPNY added 2.9 percent, leading gains in the S&P 500, followed by the utility index .SPLRCU, up 2.7 percent. Utilities tend to do better in a low interest rate environment.

The Dow Jones industrial average .DJI rose 227.11 points, or 1.27 percent, to 18,076.19, theS&P 500 .SPX gained 25.14 points, or 1.21 percent, to 2,099.42 and the Nasdaq Composite.IXIC added 45.39 points, or 0.92 percent, to 4,982.83.

U.S. short-term interest-rate futures contracts jumped, pushing expectations for the first rate hike farther into the future. Traders now see a 60 percent chance that the first Fed rate hike will come in October, based on CME FedWatch.

Among the day's gainers, Oracle (ORCL.N) rose 2.9 percent to $44.13 a day after it posted flat third-quarter revenue and slightly lower profit. However, it raised its quarterly dividend 25 percent to 15 cents a share.

A lock-up period in Alibaba (BABA.N) shares expired Wednesday, with a larger one expiring in September. The stock hit a high of $120 in November and closed Tuesday at $84.50, about 24 percent above its IPO price. Shares ended up 0.1 percent at $84.59.

Volume was high. About 7.9 billion shares changed hands on U.S. exchanges, well above the 6.6 billion average for the month to date, according to BATS Global Markets.

Advancing issues outnumbered decliners on the NYSE by 2,549 to 546, for a 4.67-to-1 ratio; on the Nasdaq, 1,692 issues rose and 1,030 fell, for a 1.64-to-1 ratio.

The S&P 500 posted 74 new 52-week highs and 7 new lows; the Nasdaq Composite recorded 157 new highs and 48 new lows.