The Dow Jones Industrial Average (DJINDICES:^DJI) was up eight points, to 16,344, at 1:30 p.m. EDT while the market waits for the Federal Reserve's statement on the taper of its economy-stimulating quantitative easing effort. The S&P 500 (SNPINDEX:^GSPC) was up one point to 1,873.
UnitedHealth Group (NYSE:UNH) was pulling the Dow Jones up with a 2.8% rise to $80.18. Health care is the only sector in the S&P 500 up for the day, rising 0.3%.
A Kaiser Family Foundation report released yesterday found that health insurers had largely maintained their market share despite all the new insurance enrollments due to Obamacare. We are now less than two weeks away from the March 31 deadline to sign up for health insurance. There were only 943,000 new enrollees last month, which brought the total to 4.2 million, well below the government's target of 7 million. Since we're a nation of procrastinators, March's numbers should be better than February, though I have not seen anything to confirm this or explain why health care is up for the day. With Wall Street plugged in to the government bureaucracy, it wouldn't surprise me to learn there is another change coming that will be beneficial to health insurers that we don't know about yet. No matter what happens, Fool analyst Dan Carroll recently highlighted UnitedHealth as one of the three health care dividend giants every investor needs to know about.
What will the Fed do?
The Federal Reserve Open Market Committee's statement is due in less than 30 minutes, followed by Federal Reserve Chairwoman Janet Yellen's press conference at 2:30 p.m. The central bank is expected to announce another $10 billion taper of its asset purchases, to $55 billion a month. It also appears likely to announce changes to its language regarding when the committee will raise short-term interest rates from the current near-zero interest rate policy.
In previous statements, the Fed has said "the current exceptionally low target range for the federal funds rate of 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored."
More recently, the committee added to its statement the line, "It likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent."
With unemployment at 6.7%, members of the Federal Reserve have been out in the media emphasizing the phrases "at least as long as" and "well past the time" when it comes to the 6.5% unemployment level. The Fed wants to reassure the market that interest rates will remain at zero for quite some time.
The Fed is expected to change the language away from an explicit level of unemployment to something more vague. Expect to see some line similar to this language from its current statement, that "the Committee will also consider other information including additional measures of labor market conditions." The key point is that interest rates of close to zero are here to stay for another year or two. That's good news for banks, but bad news for savers.
So what can an investor do in times like this? It's hard to stay sober while everyone around you is drunk on Fed-stimulus punch, telling you to join in on the fun. My advice: Keep learning, focus on your goals, have an investing plan, stick to it, and ignore the crowds.