UPDATE: 4 p.m. EDT
U.S. stocks reversed and closed lower Thursday after the Federal Reserve left interest rates unchanged. After trading flat following the central bank’s initial statement, the Dow Jones Industrial Average rose nearly 200 points during a speech from Federal Reserve Board Chair Janet Yellen, only to reverse and close 60 points lower after she left the door open to hiking rates as early as October.
Original story: U.S. stocks soared Thursday afternoon, with the Dow Jones Industrial Average jumping nearly 200 points, after the Federal Reserve left interest rates unchanged. All three major U.S. averages jumped more than 1 percent after initially fluctuating following the central bank's statement.
Despite leaving rates at historic lows, Yellen sounded optimistic on the health of the U.S. economy, saying October "remains a possibility" for the first rate hike since the Great Recession.
The Dow Jones Industrial Average (INDEXDJX:.DJI) rose 180 points, or 1.1 percent, to 16,924. The Standard & Poor's 500 index (INDEXSP:.INX) added 24 points, or 1 percent, to 2,019. The Nasdaq composite (INDEXNASDAQ:.IXIC) gained 67 points, or 1.4 percent, to 4,955.
Eight of the 10 S&P 500 sectors traded higher, led by a nearly 2 percent gain in utilities, while telecom sank nearly 1 percent.
The yield on the 10-year Treasury note fell to 2.22 percent as investor expectations for a rate hike this year declined. The drop in yields helped push interest rate-sensitive sectors higher.
Meanwhile, the U.S. dollar dipped against major world currencies, with the euro trading at $1.14.
Most experts who argued the Fed would hold off on raising rates this month pointed to the recent stock market volatility that saw all three of the U.S. major averages fall into correction territory amid fears that China, the world's second-largest economy, was slowing at a faster-than-expected pace.
Economists were almost evenly split about the prospects of a U.S. rate hike this week, with the Bloomberg consensus poll showing 39 economists looking for no change in the federal funds rate, while 41 were looking for a hike of 25 basis points, or a quarter of a percent. The financial markets, however, were pricing in only about a 30 percent chance of a rate hike in September.