Dovish Fed Lifts Dow Jones Industrial Average to 227-Point Win

The FOMC is entertaining the possibility of a mid-year interest rate hike

Mar 18, 2015 at 4:18 PM
facebook twitter linkedin

After flirting with a triple-digit deficit in early afternoon trading, the Dow Jones Industrial Average (DJIA) shot sharply higher and the Nasdaq Composite (COMP) briefly hurdled the 5,000 millennium mark, after the Federal Open Market Committee (FOMC) released its latest policy statement. Most of the fanfare revolved around the absence of the word "patient," suggesting the central bank could be gearing up to raise interest rates in the coming months. While specifics were scant, Fed Chair Janet Yellen reiterated during a press conference that a rate hike would be based on economic data -- perhaps as early as June. The news sent crude and gold sharply higher, as well, and boosted the Russell 2000 Index (RUT) to its highest mark on record.

Continue reading for more on today's market, including:

The Dow Jones Industrial Average (DJIA - 18,076.19) was churning lower until the FOMC news hit the wires, sending the index to a 227.1-point, or 1.3%, gain -- and back above 18,000 for the first time since March 5. Caterpillar Inc. (NYSE:CAT) led a group of 28 blue-chip advancers, with a 3.7% pop. The lone decliner was Wal-Mart Stores, Inc. (NYSE:WMT), which finished 0.1% lower, while Cisco Systems, Inc. (NASDAQ:CSCO) was flat.

The S&P 500 Index (SPX - 2,099.42) briefly toppled the round-number 2,100 mark, and finished on a win of 25.1 points, or 1.2%. The Nasdaq Composite (COMP - 4,982.83) traded above 5,000 for a short time, but settled on a more modest 45.4-point, or 0.9%, lead.

The CBOE Volatility Index (VIX - 13.97) got smacked by the broad-market rally, tumbling 1.7 points, or 10.8%, for its first finish south of 14 since March 3.



5 Items on Our Radar Today:

  1. The FOMC signaled that the era of historically low interest rates is coming to an end in its latest policy statement. The central bank notably omitted the word "patient" from the communique, and did not provide a concrete timeline for rate hikes -- save for a phrase that specified a rate hike at the April gathering is "unlikely." (CNBC)
  2. At SBUX's annual shareholder meeting, the company announced the approval of a 2-for-1 stock split, effective Thursday, April 9. Additionally, the firm said it will roll out a trial of its coffee-delivery program in New York and Seattle later this year. (Forbes)
  3. Puts were again popular on this struggling financial stock , which was temporarily halted today.
  4. Microsoft Corporation (NASDAQ:MSFT) will begin phasing out Internet Explorer ... which should come as a surprise to no one.
  5. Option bulls rolled the dice on extended gains for this energy stock.

For a look at today's options movers and commodities activity, head to page 2.




Crude rebounded from a midday deficit -- and a fresh six-year low -- as the Fed hinted at a possible mid-year interest rate hike and the dollar fell. Specifically, oil for April delivery rose $1.20, or 2.8%, to settle at $44.66 per barrel.

Gold got a lift from pre-Fed anxiety, and extended its gains in electronic trading after the FOMC statement. The April-dated contract settled $3.10, or 0.3%, higher at $1,151.30 per ounce.


If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Common mistakes options traders make


Special Offers from Schaeffer's Trading Partners