×

Why stocks aren’t rising after dovish Fed statement

A regular old dovish statement may not be good enough for stocks.

After the Federal Reserve released its January policy statement, stocks quickly staged a retreat, and gold rose.

This despite the fact that the statement itself was seen as skewing — if anything — mildly dovish.

In changes to the January statement as compared to December, the Fed replaced the clause "economic activity has been expanding at a moderate pace" with the less enthusiastic "labor market conditions improved further even as economic growth slowed late last year." Market inflation measures have now "declined further."

And in the big addition to the statement, the Fed made clear that it is "closely monitoring global economic and financial developments," which have been pretty unambiguously negative.

Read MoreHere's what changed in the new Fed statement

Taken together, this would seem to imply that the U.S. central bank has become less inclined to raise rates this year, at the margins.

"The market is viewing the Fed statement as more dovish," Societe Generale's Larry McDonald said Wednesday on CNBC's "Power Lunch."

The reason that the dovish statement is "not getting a lot of people excited on the equities side," he added, is that "the beast in the equities market needs a higher bar; it need more dovishness to get excited."

Cowen's head of equity sales trading, David Seaburg, sees it a bit differently.

"This was really a priced-in event," Seaburg said Wednesday, also on the "Trading Nation" segment. "It's a sell-on-the-news [scenario]. We saw a big move yesterday, [so] this is traders taking profits."

Want to be part of the Trading Nation? If you'd like to call into our live Monday show, email your name, number and question to TradingNation@cnbc.com.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

Read more

Connect