Friends
As expected, the Federal Reserve raised the Fed Funds rate 75 basis points at the conclusion of today’s FOMC meeting. The rate now sits at 3.75% to 4%. Market participants knew that a 75-basis point hike was coming, but what they were listening for in today’s press conference was the direction and speed of future Fed rate hikes. In the official statement release it was hinted that we might be getting close to the end of this massive monetary policy shift, but in his press conference Chair Powell threw cold water on that interpretation saying basically that it was premature to be thinking about pausing rate hikes. So, which is it? Are we close to the end of this rate hike cycle or not? The bulls have been betting all year that a pivot is just a bad economic data point away and so far, they have been thwarted at every turn by the Fed Chair. As we have said all year, this fight against inflation was going to take some time to play out. Despite the hopes and wishes of the bulls, it doesn’t appear we are anywhere near done just yet.
Stocks moved higher on the release of the Fed statement at 1:00, but after the Fed Chair was done raining on everyone’s parade in his press conference, stocks moved lower. By the close, the Dow Jones Industrial Average was down 505 points to finish the day at 32,147. The S&P 500 was down 96 points to close at 3,759. The Nasdaq Composite Index was down 366 points to close at 10,524. Gold was down $7 to trade at $1,642 per ounce, while oil was up $.85 to trade at $89.22 per barrel WTI.
So, as we have seen all year, another huge bear market rally may have run into another wall. Again, we’ve thought this bear market was going to be about time. The Fed has to remain diligent here or they will lose all credibility (some say they already have). Let’s see how the rest of the week plays out.
Have a nice evening everyone.
