The Fed surprised the market by dialing back its outlook for rate increases for the rest of the year following the conclusion of its monetary policy meeting, with the markets jumping off their lows to finish mixed, as pressure on financials accelerated following the decision. Treasury yields tumbled following the announcement and the U.S. dollar moved to the downside as well, while gold rose and crude oil prices reversed to the upside following a bullish oil inventories report. In equity news, FedEx disappointed with its results, while Google’s parent is facing a third antitrust fine from the European Commission for its advertising practices.

The Dow Jones Industrial Average (DJIA) declined 142 points (0.6%) to 25,746, the S&P 500 Index was 8 points (0.3%) lower at 2,824, while the NASDAQ Composite increased 5 points (0.1%) to 7,729. In heavy volume, 928 million shares were traded on the NYSE and 2.4 billion shares changed hands on the NASDAQ. WTI crude oil gained $0.94 to $60.23 per barrel and wholesale gasoline added $0.03 to $1.92 per gallon. Elsewhere, the Bloomberg gold spot price advanced $7.73 to $1,314.29 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—lost 0.5% to 95.92.

At 2:00 p.m. ET, the Federal Open Market Committee (FOMC) concluded its two-day monetary policy meeting, announcing no change to its target range for the Fed funds rate of 2.25%-2.50%. The Committee indicated that since it met in January, “the labor market remains strong but that growth of economic activity has slowed from its solid rate in the fourth quarter,” and that, “Recent indicators point to slower growth of household spending and business fixed investment in the first quarter.” As well, in a surprising move, the Committee scaled back its projected rate increases, known as the “dots plot”, to zero for the remainder of this year, and only one for 2020. At the December 2018 meeting, the FOMC had projected expectations of two rate hikes for 2019. In regards to its balance sheet run-off, the central bank said it will conclude the program at the end of September. The Committee noted that it “will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate.”

Updated economic projections were also released, with the Fed decreasing its current year forecast for GDP to 2.1% from its estimate of 2.3% in December, and inflation to 1.8% from a prior 1.9% estimate. Its outlook for the unemployment rate moved 0.2 percentage points higher to 3.7%. In his scheduled press conference after the statement, Chairman Jerome Powell said that the U.S. economy is in a “good place”, and is expected to grow at a solid pace this year. Powell also cited “tightening financial conditions” as partial justification for the Committee’s change in its rate outlook, while BREXIT and trade talks pose additional risks to its stance.

The MBA Mortgage Application Index moved 1.6% higher last week, following the prior week’s 2.3% rise. The increase came as a 3.5% gain in the Refinance Index was enhanced by a 0.3% move higher for the Purchase Index. The average 30-year mortgage rate decreased 9 basis points (bps) to 4.55%.

Treasuries finished higher, accelerating to the upside following the Fed announcement, as the yield on the 2-year note fell 7 bps to 2.39%, the yield on the 10-year note declined 8 bps to 2.53%, and the 30-year bond rate was down 5 bps at 2.97%.

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