The Federal Open Market Committee meeting has ended, and the Fed is bullish on the state of the economy. Unemployment is expected to fall as low as 6.5% next year and may even reach 6% in 2015. Inflation is expected to be lower than expected this year, but in the next two years it should remain at 2% or less, a forecast that doesn't indicate tightening of monetary policy anytime soon.
The market had been looking for signs of tapering of the Fed's $85 billion-per-month bond-buying program, but the Fed didn't change its statement, so we still don't know when that easy money will end. All in all, it was a bullish statement about the economy, but it sparked a sell-off in afternoon trading. As of 3:25 p.m. EDT the Dow Jones Industrial Average (DJINDICES:^DJI) has fallen 0.83%, and the S&P 500 (SNPINDEX:^GSPC) is down 0.79%.
It's worth noting that the sell-off that hit markets upon the Fed's announcement affected everything from stocks to commodities. Gold fell sharply and is now down 0.5% for the day, and oil is down slightly to $98.25. The market's knee-jerk reaction can cause head-scratching, especially on Fed-focused days.
On a company level, shares of telecommunications giants AT&T (NYSE:T) and Verizon (NYSE:VZ) are down 1.7% and 2.2%, respectively, to lead the Dow's decline today. DISH Network dropped its bid to buy Sprint Nextel (NYSE:S), leaving the door wide open for SoftBank to step in and buy the company. That would be the best-case scenario for Sprint from a competitive standpoint, because SoftBank could provide the funding necessary to build out a network that could rival AT&T and Verizon Wireless.
On the flip side, AT&T and Verizon Wireless would hate to see additional competition, given their comfortable duopoly in the lucrative wireless business. Sprint is years behind both companies in building wireless infrastructure, but it could build a formidable opponent with a new owner.