Fed's Message: Don't Mind Us, Just Keep Making Money
NEW YORK (TheStreet) -- The Federal Reserve on Wednesday sent a message to investors: Go about your business.
The Federal Open Market Committee, which determines the central bank's monetary policy, left interest rates unchanged and noted that the economy "paused" in recent months, largely due to weather-related disruptions from Hurricane Sandy.
"The message was tamped down a bit, because although the chairman
Anderson was referring to the selloff in major U.S. equity indices on Jan. 3 moments after the Fed released minutes of its December meeting that showed a split in sentiment among FOMC members of when the central bank should end its quantitative-easing programs -- some wanted the end of 2013, a few wanted well before the end of this year and others wanted to maintain the aggressive policy.
The Dow Jones Industrial Average on that day dropped to as low as 13,377 points an hour after coming off its intraday high of 13,428, or a 0.4% dip.
U.S. equities were lower on Wednesday, but not dramatically so, as investors shrugged off a surprising 0.1% contraction in gross domestic product during the fourth quarter of 2012. The benchmark S&P 500 has risen almost 6% this year, almost half as much as for all of 2012, as investors take on greater risks and pile into equities.
The gross domestic product report, though, likely grabbed the attention of central bankers during their two-day meeting. Much of the decline could be attributed to weaker defense spending -- in fact, the least since 1972, CRT Strategist David Ader said in an interview.
Oliver Pursche, co-portfolio manager at GMG Defensive Beta Funds, blamed protracted disagreement among politicians on Capitol Hill for the lackluster GDP report.