By CNN Business
From CNN Business' Anneken Tappe
US stocks closed sharply higher on Wednesday after the Federal Reserve’s monetary policy update broadly met investors’ expectations.
The central bank didn’t announce a rollback of its easy money policies but said that conditions could soon be met to do so.
Wall Street scored the rebound it attempted and failed at Tuesday: All three major indexes closed 1% higher.
The Dow and S&P 500 recorded their best days since July. For the Nasdaq Composite, it was the best day in a month.
From CNN Business' Allison Morrow
All right, the two-day Federal Reserve meeting has wrapped up, and Chairman Powell has spoken. The Fed's actions today were largely as expected.
Key takeaways:
From CNN Business' Allison Morrow
A reporter turned the focus of the Fed press briefing onto Chairman Powell himself, asking whether the Fed chair, who was appointed by Donald Trump, whether he had any expectations about his reappointment or future replacement.
“I have nothing for you on that today. Sorry.”
Powell's term is up in February 2022, and President Joe Biden hasn't publicly revealed his thinking on the matter.
From CNN Business' Allison Morrow
Fed Chair Jerome Powell joined a chorus of officials in underscoring the importance of the US raising its debt limit to avoid defaulting.
Powell declined to comment on what conversations, if any, he's had with elected officials on a plan for such an unprecedented event.
But, he said, "I think we can all agree" the United States needs to pay its bills on time. "It's very important that the debt ceiling be raised in a timely fashion," he added.
The Treasury has warned that it will run out of cash next month, and it's up to Congress to authorize a debt ceiling suspension. That typically procedural vote has turned into a deeply partisan standoff.
From CNN Business' Allison Morrow
Investors got what they wanted from the Federal Reserve on Wednesday at the end of the central bank’s two-day meeting: The easy-money policies that have been propping up Wall Street since the spring of 2020 will continue for a while longer.
And when the Fed does begin to tighten the spigot, the central bank said investors will have plenty of notice. “If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.”
Investors have long expected the Fed to clamp down on the stimulus measures as the recovery was coming along nicely over the summer. But a disappointing August jobs report pushed those expectations back.
Stocks remained in the green Wednesday afternoon.
From CNN Business' Anneken Tappe
So stocks are rallying, not least because nobody expects fireworks from the Federal Reserve later. Even so, this has been a turbulent week for investors.
So what should we make of this?
What's been worrying people over the past months came to a head this week, said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management: inflation, Fed policy, China growth, US growth, fiscal issues, debt ceiling negotiations.
"All that against the question of whether the market can still go up," he told Alison Kosik on the CNN Business digital live show Markets Now.
To be sure, investors do have reasons to be worried. But when it comes to the American consumer, the backbone of the economy, “I think the market moves higher because the economy is in great shape," Schutte said.
As for the Fed's announcement later today, Schutte's view is aligned with that of many investors: "I don't think they will formally announce tapering," but rather hint that they will do so later this year, he said. "I think they will want to see one more employment report."
From CNN Business' Anneken Tappe
Fear that Chinese real estate developer Evergrande might stumble under its enormous $300 billion debt pile weighed heavily on the market at the start of this week. As of midday, it is rebounding hard.
"The markets have concluded that it's not going to be a systemic event [if Evergrande defaults] that will bleed into other markets... and look like they have moved on," said Danielle DiMartino Booth, chief strategist and CEO at Quill Intelligence.
In the United States, "we live in an economy where defaults filter through to all kinds of investors," she said, adding that it's unclear what a default in China might look like, not least because the Chinese government might step in.
Evergrande isn't the only source of drama this week, as the debt ceiling debate in Washington is raging. With so much uncertainty in the market it seems unlikely that the Federal Reserve will make any big moves in its policy update this afternoon.
"In the Fed's capacity as the shepherd of financial stability, I certainly think the Fed is watching" what's going on with Evergrande, DiMartino Booth said on the CNN Business digital live show Markets Now.
With regards to the debt ceiling and the worry that the federal government could run out of money, "I think there's a higher probability... that we do see a debt default or something that appears to say we're at the brink of default," she added. "Congress can legislate all day long and pass as much stimulus as they want but until the debt limit is raised you can’t pay for it."
From CNN Business' Frank Pallotta
The movie theater industry is coming off a terrible year and companies like AMC Theatres, the world's largest chain, are still working to return to normalcy.
Maybe Dogecoin will save the day!
AMC (AMC) CEO Adam Aron has been vocal on social media in a bid to reach out to investors directly — especially those who have helped turn AMC into a meme stock — and he's been tweeting about Doge recently. Here's Wednesday's tweet:
Aron is on a cryptocurrency kick, as he tweeted on Tuesday that "by year-end 2021, AMC will take Bitcoin, Ethereum, Litecoin and Bitcoin Cash for online payments."
It's unlikely embracing crypto will be a silver bullet that turns the tide of the industry. But hey, after the hell the pandemic has wrought, theaters are up for just about any currency they can get.
From CNN Business' Matt Egan
A bipartisan group of former US Treasury secretaries warned Congressional leadership Wednesday that waiting until the last minute to raise the debt ceiling raises the risks of an “accidental default” that would be disastrous for the economy.
“Even a short-lived default could threaten economic growth,” the letter to House Speaker Nancy Pelosi reads. “It creates the risk of roiling markets, and of sapping economic confidence, and it would prevent Americans from receiving vital services. It would be very damaging to undermine trust in the full faith and credit of the United States, and this damage would be hard to repair.”
The letter was signed by Henry Paulson, who served under Republican President George W. Bush, as well as four former Treasury secretaries under Democrats: Michael Blumenthal, Robert Rubin, Timothy Geithner, Larry Summers and Jack Lew.
“As former Treasury secretaries, we write to express our deep sense of urgency that Congressional leadership, working with the Administration and the President, move swiftly to initiate and complete a viable legislative process necessary to raise the debt limit,” the former officials said.
The letter acknowledges the polarized state of American politics – but stressed that shouldn’t cause a US default.
“For 232 years, our nation has consistently paid all of its bills, in full and on time,” the letter reads. “Unshakeable creditworthiness has long been a wellspring of strength for our nation, and protecting it is a sacrosanct responsibility. No Congress or President has allowed our country to default.”
Update: This post has been updated to reflect that Jack Lew also signed the letter.