Key Points
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The Federal Reserve’s meeting yesterday was mostly in line with market expectations.
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Interest rates remain unchanged, but two rate cuts are expected this year.
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Market reaction has been neutral so far, but some stocks are gaining due to bond yields falling.
The Federal Reserve concluded its meeting yesterday, and Jerome Powell delivered some comments, saying the economy is strong. Interest rates, as expected by the market, remained unchanged for now. However, rate cuts are expected later this year.
This was in line with the market, but there wasn’t anything new to alleviate the ongoing uncertainty in the market. As a result, the stock market has opened red after gaining yesterday. However, the market quickly recovered due to bond yields falling. The 10-year T-note declined to a 1-year low as many believe the Fed is on course to cut rates.
Here’s a market update as of 10:00 A.M (ET) today.
- The S&P 500 is down 2.6 points, or 0.05%.
- The Nasdaq Composite is down 1 point, basically unchanged.
- Dow Jones Industrial Average is down 27 points, or 0.06%.
The Federal Reserve’s FOMC Meeting Concludes
Yesterday’s meeting was mostly in line with what markets had expected. Powell noted GDP growth of 2.3% in Q4 2024 but projected a slowdown to 1.7% in 2025. The Fed kept interest rates unchanged and voted to keep the federal funds rate at a range of 4.25%-4.50%. The updated Summary of Economic Projections shows a 0.5% cut in 2025. This could mean two 250bps cuts.
Regardless, this gives us a neutral outlook going forward that has neither a bearish nor a bullish impact on the market. The continuing uncertainty dragged down stocks early, but declining bond yields brought relief.
Macro Data Today
Recent macroeconomic data has been mixed. Jobless claims came in at 223,000 vs. 224,000 (estimated. Previously, this was at 221,000. This is good since the labor market may be stronger, but only slightly so.
The Philadelphia Fed Manufacturing Index fell to 12.5 this month from 18.1 last month. This was above the market consensus at 8.5.
U.S. Existing Home Sales February Report also came out at 4.26 million vs. a forecast of 3.95 million. Previously, it was at 4.08 million.
U.S. Leading Index came out at 0.3% month-over-month vs. -0.2% expected.
Other News
Brussels has taken regulatory action against Google (NASDAQ: GOOG, GOOGL) and Apple (NASDAQ: AAPL) under new competition laws, despite threats from the Trump administration. The E.U. hit both companies with antitrust actions and accused both of boxing out smaller competitors.
SoftBank expanded its AI portfolio with a $6.5 billion deal to buy Ampere Computing. This could push up some AI stocks today.
Other Assets
- Gold: Almost unchained from yesterday’s prices. However, gold has been on a rally over the past few months.
- Oil Futures: Flat today.
- Natural Gas: Down 3% from a sharp increase previously as Middle East instability continues.
- Bitcoin: Down 1.1% today.
The image featured at the top of this post is ©Wikimedia Commons.