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Dow Rebounds as Post-Fed Jitters Subside

The Dow rebounded after a lower open Friday as investors settled down after the initial shock of the Fed's surprise move to raise the discount rate.

The Dow Jones Industrial Average was up about 10 points, after being down about 20 in the first few hours of trading.

The dollar rose against both the euro and yen.Oil climbed above $79 a barrel.Gold rose above $1,115 an ounce.

Financials and industrials were the best-performing sectors. Tech and energy were the biggest decliners.

After the bell Thursday, the Fed raised the discount rate, the rate it charges banks to borrow money, by a quarter of a percentage point to 0.75 percent. Though the Fed had signaled that such a move was on the horizon, few expected it this soon.

“I'm shocked. Completely shocked,” Todd Schoenberger, managing director of LandColt Trading said of the Fed’s move, adding that he thinks it means the Fed will raise the federal-funds rate, the rate banks charge each other and which sets broader tone for interest rates, at its next meeting in March.

But others said this is merely a technical move, not a symbolic one, and that the Fed isn't planning to raise the fed-funds rate anytime soon.

The increase in the discount rate "does not mean that the Fed is ready to hike rates or has a set time for such a move. But it does mean that the Fed is preparing the way,” said Robert Brusca, chief economist at FAO Economics. “This is very much a move to prepare markets and to test markets to see if they are ready to absorb a rate increase by putting the Fed’s lending vehicles back in a normal configuration,” he said.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said he thinks the Fed will keep the fed-funds rate on hold through the end of the year.

One theory had been that the Fed made the move after the bell Thursday because there might be a surprise spike in inflation in todays' CPI report but that didn't happen.

Consumer prices rose just 0.2 percentin January, less than expected, and core CPI, which excludes volatile food and energy components, fell for the first time since 1982.

This came after the Dow staged a three-day winning streakin which it gained nearly 3 percent.

Federal Reserve officials have been quick to say that the discount rate hike is in no way an immediate precursor to a rise in the benchmark Fed Funds rate, with St. Louis Fed President Bullard and Atlanta Fed President Lockhart among those weighing in. The subject is likely to be broached once again by New York Fed President William Dudley, scheduled to speak at an economic conference in Puerto Rico at 8:15 am New York time.

Dell'safter-the-bell earnings disappointed investors despite beating consensus estimates.

CBS also weighed in after the bell, matching estimates on the bottom line, with revenue numbers coming in above expectations.

A takeover deal is reportedly brewing in the oilfield services industry, with the Wall Street Journal reporting that Schlumberger is in advanced talks to buy Smith International.

Toyota shares continue to be in focus, as reaction comes in from around the world on CEO Akio Toyoda's decision to accept a Congressional invitation to testify to lawmakers on the automaker's recall problems.

Send comments to cindy.perman@nbcuni.com.