Friends
As expected, the Federal Reserve raised the Fed Funds rate a quarter of a percentage point today. Also, but perhaps not as much as expected, Fed Chair Powell indicated that a total of 7 rate hikes are possibly in the cards for 2022 which would bring the Fed Funds rate up to about 1.75% to 2.0% by year end. Now, as we mentioned yesterday, the market was “pricing” in 7 rate hikes this year, but it’s another thing to hear if from the Fed Chair’s own mouth.
Stocks had rallied early in the day but sold off after the FOMC statement. But after dipping into negative territory stocks rebounded and moved nicely higher by the close. For the day, the Dow Jones Industrial Average was up 518 points to close at 34,063. The S&P 500 was up 95 points to finish the day at 4,357. The Nasdaq Composite Index was up 487 points to close at 13,436. Gold was down $3 to trade at $1,926 per ounce, while oil was down $1.90 to trade at $94.54 per barrel WTI.
So, the Fed has now embarked on its inflation fighting campaign. Will they be successful? Will higher rates dampen the spirit of the consumer? Will it take a recession to actually curb demand? Right now, market participants are struggling to determine whether the Fed will tighten too much or not enough. It’s going to be quite a needle to thread, but only time will tell if they will be able to do so. Stay tuned.
Have a nice evening everyone.
