Today's Market Update with...

Harvey Katz, Value Line's Managing Editor

The stock market got out of the gate quickly yesterday, putting together a nice rally as it awaited the results of the latest Federal Open Market Committee meeting. At 2:15 PM EST, the Federal Reserve noted that it would not be raising interest rates now or anytime soon. The market initially liked the news and sent the equity market even higher.

Indeed, just moments after the FOMC meeting's conclusion, the 30-stock Dow Jones Industrial Average soared to a gain of better than 150 points, as buyers rushed in and gobbled up equities. Then, as the afternoon wore on and we neared the close, second thoughts popped up and the market sold off some, leaving the Dow ahead by just 30 points, but the smaller averages, notably the Russell 2000 Index and the Standard and Poor's 400 Mid-Cap Index, both somewhat lower.

What led to the late selloff were probably concerns about the health of the economy, notably the status of inflation. There are some who, we think correctly, forecast that inflation will begin to resurface sooner rather than later. The Fed's inaction on the interest-rate front, or even its public recognition of the looming problem of pricing, did not give such investors reason for confidence.

Meanwhile, after the close, in an earnings development of note, networking giant Cisco Systems reported better-than-expected quarterly earnings sending those shares higher in the after-market. Cisco shares and the equity futures are both indicating higher this morning, as traders get ready to start the upcoming session in less than an hour from now.