Friends
We have a lot to unpack today. First, we got the CPI number this morning. By all measures the inflation data came in a little better than expected. That helped fuel a rally in both stocks and bonds given that we have had 2 better CPI numbers in a row after a disappointing first quarter. Then, this afternoon the FOMC meeting adjourned, and the Fed statement was released. After that we had the Fed Chair’s press conference. Even with a better inflation number the Fed’s statement was a bit more hawkish that expected. The main takeaway is that instead of 3 rate cuts by year end the Fed is now predicting just one.
Stocks felt a little tremor from the Fed release and subsequent presser, but in the end, stocks finished higher for the day. By the close, the Dow Jones Industrial Average was down 35 points to finish the day at 38,712. The S&P 500 was up 45 points to close at 5,421. The Nasdaq Composite Index was up 264 points to close at 17,608. Gold was up $8 to trade at $2,335 per ounce, while oil was up $.39 to trade at $78.29 per barrel WTI.
So, as we look ahead the Fed will certainly remain data dependent, but it appears that the committee has swung more hawkish. Evidence of abating inflation will have to be more clear or economic data will have to be more dire for the Fed to begin to lower interest rates. One could almost take away from today’s proceedings that the Fed may not cut rates at all this year, yet the stock market appears to still be convinced that rate cuts will happen. If not, earnings are going to have to continue to shine in the second half of the year to justify some of these price levels (especially individual tech names). As I said there was a lot to unpack today.
Have a nice evening everyone.
