Dow’s Explosive Rally Continues as Fed Begins September Policy Meeting

The Dow Jones Industrial Average saw further gains on Tuesday, as investors turned their attention to monetary policy.

Fed Chair Powell

Jerome Powell and the Federal Reserve have embarked on a major policy shift that will likely keep interest rates lower for longer. | Image: REUTERS/Joshua Roberts/File Photo

  • The Dow Jones Industrial Average rallied by as much as 235 points on Tuesday.
  • The Federal Open Market Committee begins its two-day policy meeting in Washingon on Tuesday.
  • Economists polled by CNBC expect the Fed to keep interest rates at rock bottom until 2023.

The Dow and broader U.S. stock market extended their relief rally on Tuesday, as investors awaited reassurance from the Federal Reserve that monetary policy will remain highly accommodative for the foreseeable future.

Dow, S&P 500, Nasdaq Rally

All of Wall Street’s major indexes opened sharply higher, mirroring a bullish pre-market for U.S. stock futures. The Dow Jones Industrial Average rallied by as much as 235 points.

Dow Jones, DJIA
The Dow Jones Industrial Average extended its relief rally on Tuesday. | Chart: Yahoo Finance

Tech heavyweights Apple and Microsoft were the Dow’s biggest gainers, followed by Boeing and Intel.

The broad S&P 500 Index of large-cap stocks rose 1%, with ten of 11 primary sectors reporting gains. Energy, information technology, and communication services were the biggest gainers.

Surging tech stocks pushed the Nasdaq Composite Index sharply higher. The benchmark rose 1.4% after the open.

A measure of implied volatility known as the CBOE VIX continued lower on Tuesday. The so-called “investor fear index” declined more than 3% to 24.92 on a scale of 1-100, where 20 represents the historic average.

FOMC Meeting Underway

The Federal Reserve kicked off its two-day policy meeting on Tuesday, and the first since Chairman Jerome Powell announced a new strategy geared towards average inflation targeting. Watch the video below:

Under the Fed’s new framework, policymakers will allow inflation to overshoot its 2% target in pursuit of other macroeconomic objectives. In other words, the central bank will keep interest rates at rock bottom for the foreseeable future.

The Federal Open Market Committee will deliver its policy statement Wednesday afternoon alongside its quarterly economic projections. No change in monetary policy is expected.

Interest rates are expected to be zero-bound until at least 2023, according to a new CNBC survey of economists.

On the economic data front, U.S. industrial production rose 0.4% in August, the Federal Reserve reported Tuesday. The capacity utilization rate rose to 71.4%.

In international news, China’s industrial production rose 5.6% annually in August and retail sales rose 0.5%.

Last modified: September 23, 2020 2:31 PM
Financial Editor of, Sam Bourgi has spent the past decade focused on economics, markets, and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE, Yahoo Finance, and Forbes. Sam is based in Ontario, Canada and can be contacted at [email protected] or at LinkedIn.
Previous EA Rebrands Origin Launcher With the Most Boring Name Ever Next At 36, Prince Harry Has Never Been Happier - Thanks to Meghan Markle