Friends
As expected, the Federal Reserve raised the discount rate another quarter of a point bringing the rate to 5.25%-5.50%. Chair Powell continues to insist that the Fed’s work is not done until they see the rate of inflation running at 2%, which he guesses won’t likely be until 2025. So, why does the bond market continue to believe that rates have peaked ( hint: they probably have) and that an economic event awaits us, and the Fed will react to it by lowering rates back down?
As for stocks, by the close the Dow Jones Industrial Average was up 82 points to finish the day at 35,520. The S&P 500 was down a fraction to close at 4,566. The Nasdaq Composite Index was down 17 points to close at 14,127. Gold was up $12 to trade at $1,976 per ounce, while oil was down $.73 to trade at $78.90 per barrel WTI.
On the earnings front Microsoft and Google both beat estimates with yesterday’s earnings releases after the market close, but one stock was priced for perfection and one was not. Google had a nice move higher while shares of Microsoft sunk. We have certainly been in a feast or famine earnings season so far. Most companies are managing their bottom lines quite nicely and delivering surprisingly good net results. But as we have pointed out some stocks have moved substantially higher this year while others have languished so far in 2023. Today’s Fed action was no surprise and the markets acted as such.
Have a nice evening everyone.
