Friends
The Fed raised interest rates one quarter of a point today as expected. The Fed Funds rate now sits at 5% to 5.25%. In the statement released this afternoon the Fed indicated that they were not anticipating further rate hikes but instead will determine whether they are necessary as we go along. My interpretation is that the Fed is likely done raising rates for now, but they don’t want to commit themselves to any future action. If conditions remain relatively the same the Fed is likely to keep interest rates where they are for a while. If things deteriorate dramatically then those who have been predicting (the bond market) rate cuts in the second half of the year may get their wish. But you know the old saying, be careful what you wish for.
Stocks were relatively quiet during the Fed Chair’s press conference but sold off in the last hour of trading. By the close, the Dow Jones Industrial Average was down 270 points to finish the day at 33,414. The S&P 500 was down 28 points to close at 4,090. The Nasdaq Composite Index was down 55 points to close at 12,025. Gold was up $17 to trade at $2,040 per ounce, while oil was down $3.46 to trade at $68.22 per barrel WTI.
For more than a year and a half now we have been suggesting that this process of fighting inflation and rising interest rates would take time to play out. I know investors want it all to be over and to have some clarity about the future (I’ve been in the business more than 38 years now and I’m not sure there has ever been clarity, but I digress), but the process is playing out and we at CHJ are navigating the choppy waters with you. In the meantime, we had a robust private payroll number this morning which makes Friday’s non-farm payroll number even more intriguing. Oh, and we get a look at Apple’s earnings tomorrow after the close. Still a lot to unpack this week. Stay tuned.
Have a nice evening everyone.
