Friends
As expected, the Federal Reserve did not raise interest rates today leaving the Fed Funds rate at 5.25% -5.50%. Also, as expected, Chair Powell indicated that there is a possibility of one more quarter point rate hike before year end (from either the November or December meeting). Mr. Powell continued to reiterate that the Fed will remain data dependent (as they always do). The Fed also lessened the amount of rate decreases that the committee sees for 2024 to 2 instead of 4. They see the average Fed Funds rate being more like 5.10% next year as opposed to 4.70% previously indicated. The higher for longer narrative is directly the result of the Fed seeing economic and employment strength instead of weakness at this point of the tightening cycle.
Stocks slumped by the close and as is usually the case on Fed day, market participants didn’t seem to have confidence in either direction. By the close the Dow Jones Industrial Average was down 76 points to finish the day at 34,440. The S&P 500 was down 41 points to close at 4,402. The Nasdaq Composite Index was down 209 points to close at 13,469. Gold was up $2 to trade at $1,956 per ounce, while oil was down $.93 to trade at $90.27 per barrel WTI.
There is always a lot of volatility around these Fed meetings as market participants attempt to decipher what lies ahead for the markets and the economy given the most recent actions of the Fed. Remember, quantitative tightening continues as the Fed reduces its balance sheet month after month. Let’s see how the markets settle by the end of the week.
Have a nice evening everyone.
