Stocks Gain as Fed Leaves ‘Considerable Time’ Intact

Stocks rose, fell, and are rising again after the Federal Reserve left “considerable time” in its statement.

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The S&P 500 has gained 0.3% to 2,004.23, while the Dow Jones Industrial Average has advanced 0.3% to 17,174.93. The Nasdaq Composite has advanced 0.4% to 4,570.25.

CRT Capital’s David Ader tries to decide whether the Fed release leans dovish or hawkish:

Fed keeps language re considerable time intact, which could have been dovish, but with dots moving up (in part due a change  in increments) the market apparently reads this as hawkish.  That’s overblown in our view and given the subdued inflation language, labor slack, and moderate expansion expect that when they due remove they’ll attach data dependent and something a bit dovish to soothe.

The Lindsey Group’s Peter Boockvar says the stock market, which is rising, and the bond market, which is falling, are looking at two different things:

The FOMC still believes that there is a "significant underutilization of labor resources" after acknowledging that "labor market conditions improved somewhat further" and also said that "it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after" QE ends…

In the June forecasts where each member predicted where the fed funds rate would be by year end 2015, it was 1.13% on average. The new forecast has an average of 1.375% and this compares with the December 2015 fed funds futures contract which was trading at .74% prior to the release of today's statement…

Bottom line, we can easily argue that the statement was dovish as the two key wordings were left in but the Dot forecasts are more hawkish and that is what the bond market is responding to. The stock market is focused on the statement, the bond market and its selloff is focused on the dots.

The folks at Societe Generale think the fact that the Fed laid out an exit strategy is hawkish:

The FOMC also published the official set of exit principles. There were no surprises here in terms of the sequence and the tools, but the mere fact that they put this out today rather than December adds to the overall hawkish tone of today’s meeting.

Here’s a chart of the S&P 500′s move today:

That S&P 500–always the optimist.