While  Wednesday's Fed statement was consistent with the message predicted by analysts, investors responded by selling stocks and buying bonds. As expected, the Fed made no change in the federal funds rate or in its reinvestment policy for its Treasury and MBS holdings. In the statement, Fed officials modestly downgraded their assessment of the performance of the U.S. economy, and they expressed less confidence that inflation is on their expected path to rise to their target level. In addition, Fed officials said that they are "closely monitoring" developments in overseas economies. Some investors had hoped that the Fed would explicitly rule out a rate hike at the next meeting in March, but the statement kept open the possibility. 

Looking ahead, the important monthly Employment report will be released on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the ISM national manufacturing index and the Core PCE price index will be released  on Monday. Core PCE is the Fed's preferred inflation indicator. The ADP Employment Change and the ISM national services index will come out  on Wednesday.