Stocks jump after Fed finally raises interest rates

[NewsFeeder]

Stocks jump after Fed finally raises interest rates

[AP] - Stocks moved slightly higher after the Federal Reserve made its long-expected move to raise interest rates. The Dow Jones industrial average was up 102 points, or 0.6 percent, at 17,625 as of 2:15 p.m. ...

Stocks jump after Fed finally raises interest rates - Yahoo Finance

 

[shitepoke]

strange that if the rate was already priced in with last weeks dump then what is the rally for? Santa?

 

[userque]

strange that if the rate was already priced in with last weeks dump then what is the rally for? Santa?

Not saying that this is the reason this time (because prices can ebbnflow on their own), but:

Even when something is priced-in, there is still a (small?) probability that it was priced-in incorrectly; so, once news hits that the pricing-in is indeed correct, there can still be a "we weren't wrong" price reaction.

More simply, the price before the announcement represents at 95% (for example) certainty of a 25 bps hike. After the announcement, the price then adjusts to a 100% certainty. You see, the "priced-in" price can never be 100% certain.

 

[burrocrat]

also, it's entirely possible that the market is rigged. that there is a man behind the curtain pulling levers to send it chaotically this way then that. actually probably it's a few guys behind the curtain on a rotating basis to keep things even more unpredictable. i would actually stand to benefit and would expect great returns in that scenario because i like rolling dice and making blind bets. i would feel bad for all the technical analysis folks and wave counters and cyclists though, if that were true think of all the time they've wasted trying to figure it out.

 

[tsptalk]

The guidance going further was another reason. What next? If Yellen said they were planning to start a series of rate hikes, we could have seen a sell-off. But they didn't say that.