Friends
The belief that Fed rate cuts will not likely be happening in March (or maybe even May) seems to have taken a little life out of the bulls. With many of the biggest companies, especially the important tech giants, having already reported earnings the bulls were looking for a tailwind from the Fed. The Fed Chair on 60 Minutes last night said that the committee is fairly confident that they will be cutting rates this year, just not on the timetable the bulls were hoping for.
While bond yields move higher stocks had a difficult session, though the market averages did close off their lows of the day. By the close, the Dow Jones Industrial Average was down 274 points to finish the day at 38,380. The S&P 500 was down 15 points to close at 4,942. The Nasdaq Composite Index was down 31 points to close at 15,597. Gold was down $11 to trade at $2,042 per ounce, while oil was up $.57 to trade at $72.85 per barrel WTI.
As the Fed Chair explained, the economy is good and the inflation numbers have been better, and the Fed just wants to see a little more of the same before they begin to ease monetary policy. Of course, they run the risk of waiting too long as they did when they didn’t raise rates soon enough back in 2021. That’s why you hear Democrats screaming lower rates while the Republicans scream you better not lower rates before the election for political reasons. It will be a delicate landscape for the Fed Chair to navigate as we move closer to the election. Former President Trump has already indicated that he will replace the current Fed Chair if he is elected even though he appointed him. Fun times ahead for the Fed Chair. Kind of caught between a rock and a hard place, wouldn’t you say?
Have a nice evening everyone.
