Markets Cheer As Fed Holds Rates

Markets reacted with enthusiasm to the Federal Reserve's decision to hold interest rates Thursday.



The Dow Jones Industrial Average jumped 170 points or about 1.1 percent just after the announcement. The S&P 500 climbed 1 percent.



 The Mexican peso increased to its highest level this month against the dollar, gaining 0.6 percent to 16.4491 per dollar only 20 minutes after the Federal Reserve made its announcement.



The Turkish lira fell back to below 3 per dollar just after the announcement after reaching as high as about 3.07 earlier in the week.



"The delay will come as a relief at a time when concerns about the health of the global economy are mounting, particularly given the recent softening in China and the recessions in Brazil and Russia," wrote Joseph Lake, Global Economist for The Economist Intelligence Unit in a note published on the website International Foreign Exchange.



The euro moved slightly higher against the dollar to about 1.14 after the announcement.



As several economists commented, what was notable in the Fed's announcement was the concern with foreign markets, an issue that the Fed has never stated explicit concern with before. 



"I think the biggest thing is that we're no longer just the U.S. anymore. Traditionally they have taken care of the U.S. Now the world is our problem and they are just worried about, I think, about what it does to emerging markets. It's definitely a dovish view," commented Phil Guarco, Global Head of Fixed Income at JP Morgan Private Bank, speaking to the Washington Post.



Bond prices rose after the announcement, and the yield on the 10-year Treasury note was 2.217, down from 2.303 on Wednesday.



Goldman Sachs chief Lloyd Blankfein had predicted that the Fed would hold rates. "I wouldn't do it," he told the Financial Times ahead of the Fed meeting."It's almost a question of the Fed's wanting to get over the hurdle. Such soft factors should not be more important than hard data," he added. - Ankara