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By Anora M. Gaudiano and Sara Sjolin, MarketWatch

Fed statement 'gradual enough for the bulls, but signals a more aggressive approach down the road'

U.S. stock-market indexes recovered their poise and were trading higher on Wednesday after the Federal Reserve delivered its sixth interest-rate increase since the end of 2015 and kept its outlook unchanged for this year.

The central bank stuck to its prior forecast of three rate hikes in 2018 (http://www.marketwatch.com/story/fed-lifts-rates-in-powells-first-meeting-says-outlook-has-strengthened-2018-03-21), deciding for now to wait until next year to pencil in an additional move over what it had previously indicated. It now expects to raise rates three times as well in 2019, rather that twice.

Read:Powell press conference: live blog recap (http://www.marketwatch.com/story/fed-interest-rate-decision-and-powell-press-conference-live-blog-and-video-2018-03-21)

What are markets doing?

The S&P 500 was up 8 points, or 0.3%, to 2,725, with five of the 11 main sectors trading higher. Energy shares were leading gains, trading up more than 2.9%, as oil futures hit the highest levels in seven weeks. Consumer-staples shares were the worst performers, down more than 1%.

The Dow Jones Industrial Average , which at session highs was up more than 200 points, pared gains to trade 98 points, or 0.4%, higher to 24,825. The Nasdaq Composite Index advanced 10 points, or 0.1%, to 7,374.

Stocks initially extended gains after the Fed decision but then fell into negative territory during Powell's news conference before regaining their footing to push back into positive territory.

What is driving the markets?

The central bank raised interest by a quarter of a percentage point, as widely expected. However, Powell played down policy makers' view on future rates as seen on the so-called dot plots.

"The only thing that got a vote at the meeting was this rate hike. No one voted on the dot plot," he said.

Read:Why the stock market may find an ally in the Fed (http://www.marketwatch.com/story/why-the-stock-market-may-find-an-ally-in-the-fed-2018-03-20)

And don't miss:The Fed easily could make stocks spring higher, says J.P. Morgan (http://www.marketwatch.com/story/the-fed-looks-set-to-friend-this-market-as-facebook-flops-2018-03-20)

The yield on 10-year U.S. Treasury note (http://www.marketwatch.com/story/treasury-yields-rise-ahead-of-fed-decision-2018-03-21) initially extended its rise, topping 2.93%, before paring the increase to trade near 2.895%--not far off its level ahead of the policy announcement. Yields and Treasury prices move in opposite directions.

The ICE U.S. Dollar Index weakened after the Fed decision, trading 0.7% lower at 89.710.

What are strategists saying?

"The Fed is forecasting two more hikes this year, but beyond that nobody knows what the economy will do, so their projections are meaningless," said Joe Saluzzi, partner, co-head of Equity Trading at Themis Trading.

Saluzzi also said extremely low volumes may have contributed to the choppy price action, possibly due to the spring snowstorm hitting the East Coast.

"It's very quiet, especially for a Fed and when volumes and liquidity are thin any sizable order can move markets as we are seeing today," Saluzzi said.

"Markets should like this statement that seems to have just enough for everyone: it's gradual enough for the bulls, but signals a more aggressive approach down the road in 2019-2020," said Ryan Larson, head of equity trading at RBC Global Asset Management.

"Any selloff would suggest that investors are pricing in 2019 rate hikes," Larson said.

What data are in focus?

The current-account deficit for the fourth quarter rose by 26% in the fourth quarter (http://www.marketwatch.com/story/us-current-account-deficit-jumps-26-in-4th-quarter-2018-03-21), widening to $128.2 billion from a revised $101.5 billion in the third quarter.

Existing-home sales (http://www.marketwatch.com/story/existing-home-sales-snap-back-even-as-inventory-slides-to-a-fresh-low-2018-03-21)ran at a seasonally adjusted annual pace of 5.54 million in February.

See:MarketWatch's economic calendar (http://www.marketwatch.com/economy-politics/calendars/economic)

Which stocks are in focus?

Shares of General Mills Inc.(GIS) plunged 8.5% after earnings report and outlook that came in below expectations.

Facebook(FB) rebounded, trading 1.8% higher, but the stock was looking at a 8% weekly loss. The selloff for the social-media giant came after it was revealed that Cambridge Analytica, a firm hired to assist President Donald Trump's 2016 campaign, allegedly harvested private information of 50 million Facebook users without their permission.

See:Why Facebook shares are 'probably dead money' for rest of 2018 (http://www.marketwatch.com/story/facebook-shares-are-probably-dead-money-for-rest-of-2018-chart-watcher-2018-03-21)

WhatsApp co-founder Brian Acton said late Tuesday it was now time to delete Facebook (http://www.marketwatch.com/story/whatsapp-co-founder-who-made-billions-from-facebook-now-says-to-delete-it-2018-03-20).

MuleSoft Inc.(MULE) rose 5.8% after Salesforce.com Inc.(CRM) said following Tuesday's closing bell that it is buying the software company (http://www.marketwatch.com/story/salesforce-to-buy-mulesoft-valuing-company-at-65-billion-2018-03-20). Salesforce shares were down 1.8% ahead of the bell on Wednesday.

Southwest Airlines Co.(LUV) shares slumped by 5.1% after the company cut its outlook for first-quarter revenue per available seat mile to be in line with a year ago from previous guidance of a 1% to 2% increase.

Home-building shares (http://www.marketwatch.com/story/home-builder-etfs-rally-as-existing-home-sales-rebound-2018-03-21)rallied after existing-home sales snapped a two-month losing streak. D.R. Horton Inc. (DHI) rose 2.7%, while Lennar Corp. (LEN) advanced 2.6%.

Shares of Dow component Apple Inc. (AAPL) fell 1.9%, leading blue-chip decliners.

What are other markets doing?

Asian stocks closed mixed (http://www.marketwatch.com/story/asian-markets-bounce-back-ahead-of-fed-meeting-2018-03-20), with Japan's exchange closed for a holiday.

In Europe (http://www.marketwatch.com/story/european-stocks-slip-as-pound-gains-ahead-of-long-anticipated-us-rate-hike-2018-03-21), most indexes traded in negative territory as traders there also stayed on the sidelines ahead of the Fed.

Oil prices (http://www.marketwatch.com/story/oil-extends-gains-on-specter-of-supply-disruption-from-geopolitical-risk-2018-03-21) climbed to trade at their highest levels in nearly seven weeks, after a surprise weekly decline in U.S. crude inventories. May West Texas Intermediate crude jumped 2.4% at $65.69 a barrel.

Gold prices were also rising (http://www.marketwatch.com/story/gold-climbs-from-3-week-low-ahead-of-fed-clues-on-rate-hike-path-2018-03-21), up 1% at $1,325 an ounce.

(END) Dow Jones Newswires

March 21, 2018 15:40 ET (19:40 GMT)

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