Friends
So, today’s Fed release and subsequent press conference with Jerome Powell delivered a message that was pretty much anticipated. The statement indicated that the Fed sees 3 quarter point rate cuts in the Fed Funds rate in the second half of the year. That is about where the market was going into the meeting. Of course, the market had expected rate cuts to already be occurring when the year began so we won’t put too much stock in the current narrative. Nevertheless, the Fed realizes that they can’t cut rates too quickly because of the sticky inflationary environment and they can’t wait too long to cut rates, or the labor market might finally crack. Remember, the Fed has a dual mandate-inflation and employment.
The stock market was pleased with today’s proceedings. For the day, the Dow Jones Industrial Average was up 401 points to finish the day at 39,512. The S&P 500 was up 46 points to close at 5,224. The Nasdaq Composite Index was up 202 points to close at 16,369. Gold was up $25 to trade at $2,184 per ounce, while oil was down $1.63 to trade at $81.84 per barrel WTI.
I’ve said over and over again that conditions for higher stock prices continue to be favorable. Fed Chair Powell did nothing today to change that. I have also moaned that stock prices are not cheap, but valuation is not usually a determining factor with regards to markets going up or down in the near term. For now, the bulls continue to hold the high ground.
Have a nice evening everyone.
