Stocks posted their best week of the year, sparked by news that the dovish Fed decided to keep rates steady and signaled three rate cuts were still possible this year. As widely expected, the Fed left rates unchanged at the conclusion of its two-day meeting. But somewhat less expected, the Fed signaled its inclination to cut interest rates three times this year—each time by a quarter percentage point. That was a positive surprise for some, who worried that recent hot inflation reports would cause the Fed to reconsider its stance. Markets pushed higher Wednesday following the news, with all three averages closing at record highs. The rally continued through Thursday, boosted further by news that existing home sales rose 9.5 percent in February. The week’s rally was broad-based overall, with 10 of the 11 S&P 500 sectors posting gains (health care dropped slightly). At one point late in the week, nearly one in four S&P 500 stocks were trading at 52-week highs. That was the highest proportion in three years, which supports the idea that the rally was broadening out from mega- cap tech stocks. Turning Point The Federal Open Market Committee’s decision marks a turning point as the Fed signaled that its target range of 5.25 to 5.50 percent has topped out. That target range, in place since late last year, is the highest level in 23 years.
Chair Powell at the post-meeting press conference. He added that if the economy keeps on its current course, that the FOMC would likely “begin dialing back policy restraint at some point this year.” If the FOMC votes to ease it at its June meeting, it would be the first cut in four years. This Week: Key Economic Data Monday: New Home Sales. Tuesday: Durable Goods Orders. Case-Shiller Home Price Index. Wednesday: EIA Petroleum Status Report. Survey of Business Uncertainty. Thursday: Gross Domestic Product. Jobless Claims. Consumer Sentiment. Pending Home Sales. Friday: Personal Income and Outlays. International Trade in Goods. Retail Inventories. This Week: Notable Companies Reporting Earnings Tuesday: McCormick & Company, Incorporated (MKC, MKC.V), Dave & Buster’s Entertainment, Inc. (PLAY) Wednesday: Paychex, Inc. (PAYX), Carnival Corporation (CCL, CUK), Cintas Corporation (CTAS) Thursday: Walgreens Boots Alliance, Inc. (WBA) Final Thoughts It seems like the market heard what it needed from the Fed for the time being. This is a holiday shortened trading week with Good Friday. The bias in the market is toward the upside for now. I will reiterate we have had a long run with not much of a breather. The market may not be tired just yet, but I would expect it to take a rest at some point in the coming months before finding its second wind later in the year. Stay tuned…
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THIS WEEK'S UPDATE
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March 25, 2024
