Stocks Receive Modest Boost from Fed Statement

The Federal Reserve's statement on interest rates provided some relief for investors, with the S&P 500 and Dow Jones industrial average posting modest gains. However, the market's enthusiasm was tempered by concerns over inflation and upcoming economic reports, including the President's State of the Union speech and the January employment report. The Fed's quarter-point rate increase, its sixth since June, was expected, but the statement's retention of "measured" rate increases and contained inflation expectations helped alleviate concerns about rapid interest rate hikes.

Key Takeaways:

• The S&P 500 rose 3.78 points, or 0.3 percent, to 1,193.19, with the Dow Jones industrial average climbing 44.85 points, or 0.4 percent, to 10,596.79.
• The Nasdaq composite index rose 6.36 points, or 0.3 percent, to 2,075.06, with Google's stock jumping $14.06, or 7.3 percent, to $205.96.
• Google's fourth-quarter profit was $204 million, up from $27.3 million in the same quarter a year ago, with institutional investors expected to show greater demand for its shares.
• The Fed's statement retained language that said rate increases would be "at a pace that is likely to be measured," despite indications of growing inflation concerns.
• The yield on the 2-year note rose to 3.31 percent after the Fed announcement, while the yield on the 10-year note remained at 4.14 percent.

Statistics:

• S&P 500: -1.6 percent for the year
• Dow Jones industrial average: -1.7 percent for the year
• Nasdaq composite index: -4.6 percent for the year
• Google's stock: rose 141.7 percent since its initial public offering in August
• Google's fourth-quarter profit: $204 million
• Yield on 2-year note: 3.31 percent after the Fed announcement
• Yield on 10-year note: 4.14 percent

Sources:

• Associated Press
• Bloomberg Financial Markets
• Cantor Fitzgerald & Company
• RBC Capital Markets
• Morgan Stanley