U.S. financial markets have been reaching new highs in 2014. Today the markets awaited an announcement from the U.S. Federal Open Market Committee (FOMC) about its tapering schedule and assessment of financial market conditions. Leading into Wednesday’s FOMC announcement the S&P 500 was up 0.30% through Tuesday and the Dow Jones Industrial Average was up 0.20% for the week.
In its Wednesday afternoon press conference the FOMC discussed its June policy actions which included a reduction in asset purchases of $10 billion and no change to the federal funds target rate of 0% – 0.25%.
The FOMC affirmed that slow gradual improvement is continuing in the labor market. This was evidenced by May's unemployment rate report of 6.3%, unchanged from the previous month and below the year's average of 6.52%.
The FOMC also reiterated its lack of immediate concern with the U.S. inflation rate which has stayed below its 2% goal based on the Commerce Department’s personal consumption expenditure measure which was last reported at a 12-month increase of 1.6%. This inflation measure was in question as recent consumer price index data released on June 17 showed a 2.1% 12-month rate of increase in consumer price levels.
In addition to its monetary policy decisions the FOMC’s June projections also showed positive improvement continuing in 2015. FOMC projections for GDP in 2015 ranged from 3.0% – 3.2% while unemployment projections ranged from 5.4% - 5.7%.
The day’s news helped the S&P 500 to reach another new high, closing at 1956.98 up 0.77% for the day. The Dow Jones Industrial Average also added 0.57% on Wednesday closing at 16,906.32. The DJIA was led by Coca-Cola (KO) which gained 1.56% on Wednesday and closed at $41.56.