The Fed thinks stocks are expensive.
In the Minutes of its September meeting released Thursday, the Federal Reserve indicated that it could still raise interest rates this year.
The Minutes also shed some light on why the Fed put off a rate hike this year.
One of them was the shake up in global financial markets in August that took the S&P 500 down 6% during the month and saw the Dow plunge 1,000 points on the morning of August 24.
But according to the outlook from some Fed officials, stocks were expensive anyway.
Here's the commentary from the Minutes:
"In the United States, equity prices fell, on balance, amid significant volatility, and risk spreads for businesses widened. Many participants judged that the effects of these developments on domestic economic activity were likely to be small, but they acknowledged the risk that they might restrain U.S. economic growth somewhat. In particular, the appreciation of the dollar since mid-2014 was still a substantial drag on net exports, and the further rise in the dollar over the intermeeting period could augment the restraint on U.S. net exports. Some participants commented that the recent decline in equity prices needed to be viewed in the context of overall valuation levels, which they saw as relatively high, and a couple noted that volatility had begun to subside."
The Fed also noted that US stock indexes became highly correlated with their foreign peers during August and September, and that concerns about global growth may have weighed on stock prices.
However, investors also likely "reassessed valuations and risk" in stocks, in the Fed's view.