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  • Fed leaves policy rate unchanged as expected.
  • Financials help Dow close the day flat.
  • Energy shares extend slide as crude oil prices continue to fall.

Major equity indexes started they  mixed and stayed relatively quiet in the first half of the session as investors stayed focused on the Fed’s announcements. The FOMC decided to keep the policy rate unchanged at the range of 2 – 2.25% as expected, and didn’t deliver any surprising remarks in its policy statement. However, the fact that the Fed didn’t touch on concerns over the recent market volatility or the flattening yield curve made it clear that a 25 bps rate hike was imminent in December. The rate-sensitive S&P 500 Financials Index reacted positively and closed the day 0.32% higher.

Commenting on the FOMC statement, “The Fed has recognized that there is one part of the economy that is slowing a little bit, but it is not deterring them from their ‘gradual increase’ language. Not yet anyway. There is really nothing to point to what the market had hoped, that there would be a more dovish stance. So I think this is more of what we call a hawkish hold,”  Jamie Cox, managing partner at Harris Financial Group, Richmond, Virginia, told Reuters.

On the other hand, falling crude oil prices continued to weigh on the energy sector with the S&P 500 Energy Index ending the day with a 2.2% loss.  

The Dow Jones Industrial Average finished the day virtually unchanged at 26,191.36, the S&P 500 fell 7.05 points, or 0.25%, to 2,806.84 and the Nasdaq Composite lost 39.87 points, or 0.53%, to 7,530.89.

DJIA technical outlook by FXStreet Chief Analyst Valeria Bednarik

Technical readings in the Dow ´s daily chart maintains a positive technical stance as indicators have decelerated their advances but hold near fresh weekly highs, as the index advanced far above their moving averages. In the 4 hours chart, the risk is also leaned to the upside, as the 20 SMA has extended its advance above the 200 SMA after crossing the 100 SMA last week, while technical indicators remain within overbought levels, without directional strength.

Support levels: 26,079 – 26,020 – 25,967.

Resistance levels:  26,278 – 26,340 – 25,398.