The Fed is signaling that it is on the path to a more hawkish posture, but that isn't a big surprise, and the market is seeing a mildly positive reaction to the policy statement so far.
For the first time, the policy statement says that moderation of asset purchases "may soon be warranted," but it is expected that rate increases won't occur until the end of 2022.
Fed Chair Jerome Powell will hold a press conference shortly and will likely stress that the Fed is ready to start easing accommodation, but will stay flexible as economic conditions evolve. The market is satisfied with the vague time frame that is being presented and doesn't seem to fear any sudden reaction to inflationary pressures.
We are now seeing "V"-shaped action in the market on the Fed news with the S&P 500 well into the gap that was formed on Monday morning. This is not a great technical pattern, but -- as is so often the case --the market loves to love the Fed, and this reaction has probably caught some market players poorly positioned.
As the reactions to the Fed start to slow, we should see better chart formation in individual stocks. Right now, this action is primarily index-driven, and that will shift as the news is digested.
The biggest positive in this market remains the very strong retail interest. This is still a market where traders want to buy the dips rather than sell them.