Friends
First things first- the Fed did not cut the Fed Funds rate today. Ok, we were right about that. What the Fed did do today was grease the skids for a rate cut as soon as the next meeting in July. Citing trade war concerns and lack of global growth as potential problems, the Fed Chair indicated in his press conference that the Fed stands ready to accommodate and “act appropriately”. Indeed, as the Fed Chair Powell said, “an ounce of prevention is worth a pound of cure”. Though the rate cut was not forthcoming, market participants seemed appeased by the dovishness of the statement and stocks pushed slightly higher towards the close.
For the day, the Dow Jones Industrial Average was up 38 points to close at 26,504. The S&P 500 was up 8 points to finish the day at 2,926. Gold was up $4 to trade at $1,355 per ounce, while oil was up $.32 to trade at $54.22 per barrel WTI.
Over the next couple of trading sessions, we’ll find out if the Fed was able to thread the needle with regards to market expectations. Did the removal of the word “patience” in the statement give the bulls enough to continue the recent rally in stocks? Of course, a deal with China would certainly add another ingredient to the mix. Obviously, that would be good for the economy, but might it not also make the Fed more “patient”?
Have a nice evening everyone.
