US stocks rise after Fed promises low rates for years: September 16, 2020

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4:05 p.m. ET, September 16, 2020

Stocks finish mixed

From CNN Business' Anneken Tappe

Wall Street ended mixed on Wednesday, even after the Federal Reserve committed to lower interest rates for longer.

While lower interest rates should be good for stocks, because they help companies borrow for less, the Fed reiterated that the recovery will take a long time.

The Dow closed up 0.1%, or 37 points, while the S&P 500 finished down 0.5%.

The Nasdaq Composite closed 1.3% lower.

3:33 p.m. ET, September 16, 2020

"There is no cookbook," says Powell about new Fed framework

From CNN Business' Anneken Tappe

Federal Reserve Chairman Jerome Powell called the central bank's forward guidance "strong."

Sure, the majority of members of the Federal Open Market Committee backed the Fed's plan ahead -- but there were two dissenters.

Dallas Fed President Robert Kaplan thinks the Fed should reconsider rates when its members are confident that the economy has weathered the storm and is on the path higher. Meanwhile, Minneapolis Fed President Neel Kashkari believes rates should remain at the current, low level until core inflation has reached 2% "on a sustained basis."

But the dissent isn't a bad thing, Powell said.

"There is no cookbook," he told reporters, adding that some disagreement is both to be expected and desired.

3:28 p.m. ET, September 16, 2020

Powell: We can't forget about how many people are still unemployed

From CNN Business' Anneken Tappe

The White House has been touting the improvements in the economy and the millions of jobs that have been added back since the pandemic started. But plenty of people remain out of work, and we can't forget about them, Federal Reserve Chairman Jerome Powell said during today's press conference.

As of the August jobs report, the country is still down 11.5 million jobs since February.

And particularly as the pace of returning to work slows down, the Fed can't just forget about those who are still unemployed.

Similarly, the level of weekly claims for jobless benefits remains "maybe five times" higher than they used to be, Powell said. Tomorrow's report is expected to show 850,000 new first-time claims, which is down from 6.9 million at the peak.

"That just tells you that the labor market has improved, but that it's a long way from maximum employment," Powell said.

3:13 p.m. ET, September 16, 2020

Is the Fed looking at the right stuff?

From CNN Business' David Goldman

The Fed looks at unemployment and inflation, trying to balance the two to keep the economy humming. But does that mean it ignores other economic metrics that affect Americans, including income inequality and housing affordability?

That's what CNN Business' Anneken Tappe asked Federal Reserve Chairman Jerome Powell, and he agreed that the Fed should address those to the best of its ability -- without overstepping and getting in Congress' way.

"The relative stagnation of incomes for people at the lower end of the income spectrum and also lower mobility ... are things that hold back our economy. They are," Powell said. "The thing is, we don't really have the tools to address those. The we have interest rates and bank supervision and financial stability policy and things like that, but we can't get at those things through our tools."

Powell noted, however, that elected officials can -- and should address them.

"We need that prosperity to be very broadly spread," he said. "So, the high unemployment in a particular racial group like African Americans when, you know, we would look at that as we think about whether we're really at maximum employment."

But, ultimately, he noted, "these are issues for elected representatives."

2:59 p.m. ET, September 16, 2020

Jay Powell: I can't do this all by myself, folks

From CNN Business' David Goldman

Federal Reserve Chairman Jerome Powell, ever the careful wordsmith, called on lawmakers to get with the program and spend more money to stimulate the US economy.

"The initial response from fiscal authorities was rapid. It was forceful and pretty effective," Powell said.

We're seeing the results of that in the rapid economic recovery. But the recovery is slowing.

"That said, my sense is that more fiscal support is likely to be needed," Powell said. "Of course, the details for that are for Congress, not for the Fed, but I would just say there are still roughly 11 million people still out of work due to the pandemic and a good part of those people were working in industries that are likely to struggle."

If Congress and the Trump administration fail to act, Powell essentially predicted the stock market would crash.

"Just about all -- the overwhelming majority -- of private forecasters who project an ongoing recovery are assuming there will be a substantial additional fiscal support," Powell said.

2:50 p.m. ET, September 16, 2020

This is what counts as good news in 2020

From CNN Business' David Goldman

The Fed had some optimistic news to report at the conclusion of its meeting today. Well ... less bad than before, anyway.

The Open Market Committee updated its economic projections for the year, and it appears that the economy isn't performing quite as poorly as the Fed predicted it would.

For example, the central bankers expect a median 7.6% unemployment rate for 2020, down from the 9.3% forecast in June. And projections for gross domestic product — the broadest measure of the economy — are now for a 3.7% decline for the year, a smaller contraction than the from 6.5% decline expected in June.

So the economy is still going to shrink and unemployment is still really high — but not nearly as bad as what it seemed like at the beginning of the year.

2:44 p.m. ET, September 16, 2020

Jerome Powell: Wear a mask and save the economy

From CNN Business' David Goldman

Mask wearing continues to be sore subject for many Americans, but Federal Reserve Chairman Jerome Powell says it could save the economy.

"All of us have a role to play in our nation's response to the pandemic. Following the advice of the public health professionals, to keep appropriate social distances and to wear masks in public will help get the economy back to full strength," Powell said. "A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities."

Want that mom & pop shop around the corner to survive? Wear a mask. Want to get your job back? Stay socially distant, the Fed argues.

Powell and the Fed have long said that the recovery will depend almost entirely on the path of the virus. As long as it continues to infect Americans, the economy will not return to where it was earlier in the year.

2:21 p.m. ET, September 16, 2020

Fed pledges to keep interest rates near zero for years

From CNN Business' Anneken Tappe

The Federal Reserve committed Wednesday to do more to help the US economic recovery, promising more asset purchases and lower interest rates for even longer than it previously expected.

The Federal funds rate remained unchanged at zero to a quarter percentage point, and will stay there until America's labor market has recovered "consistent with the Committee's assessments of maximum employment" and the inflation rate has risen to 2%, and is on track to exceed that level for some time.

Given the country is still down 11.5 million jobs since February and the consumer price inflation rate over the past 12 months stood at 1.3% last month, this seems like a long way off.

A survey of Fed officials showed the group expects rates to remain at or near zero through 2023 -- a year later than the previous survey conducted in June.

The Dow surged 300 points, or 1.6%, and the S&P 500 was 0.6% higher.

2:09 p.m. ET, September 16, 2020

Dow initially jumps about 300 points after Fed decision ... but then cools off

From CNN Business' David Goldman

The Fed announced that it would keep rates low for years, doubling down on its new policy first announced in Jackson Hole last month.

The Dow initially spiked, rising about 300 points. It's now up about 200.