Summary Of the Markets Today:
- The Dow closed down 530 points or 1.63%,
- Nasdaq closed down 1.60%,
- S&P 500 closed down 1.65%,
- Gold $1969 up $27.50,
- WTI crude oil settled at $70 up $0.66,
- 10-year U.S. Treasury 3.432% down 0.168 points,
- USD $102.48 down $0.78,
- Bitcoin $26,752 – 24H Change down $1,438 – Session Low $26,752
*Stock data, cryptocurrency, and commodity prices at the market closing.
Today’s Economic Releases:
The big deal today was the Federal Reserve meeting statement (FOMC) where the pundits were awaiting whether the federal funds rate would be raised. Yes – it was raised 1/4 point so the target range for the federal funds rate is now 4-3/4 to 5 percent. The beginning of their meeting statement gave homage to the banking crisis which was partly caused by the previous increases in the federal funds rate.
Recent indicators point to modest growth in spending and production. Job gains have picked up in recent months and are running at a robust pace; the unemployment rate has remained low. Inflation remains elevated.
The U.S. banking system is sound and resilient. Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain. The Committee remains highly attentive to inflation risks.
What will happen next – the answer in the meeting statement:
The Committee will closely monitor incoming information and assess the implications for monetary policy. The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the extent of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt, and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.
Concurrent with the release of the meeting minutes were the FOMC’s economic projections. Their projections were mostly unchanged for GDP, unemployment, and inflation – as though the FOMC does not anticipate any further fallout from the banking crisis. Their median projections for the federal funds rate were 5.1% (2023), 4.3% (2024), and 3.1% (2025).
I was selected as an initial user of Google’s AI “Bard”. I posed this question to Bard = “highlights of the Federal Reserve meeting statement (FOMC) today”. Bard’s response:
The Federal Reserve raised interest rates by 0.25 percentage points on Wednesday, as expected, and signaled that it would continue to tighten monetary policy at a measured pace.
The central bank said it expected to raise rates by 0.5 percentage points at its next meeting in May and to continue reducing its balance sheet at a rapid pace.
The Fed’s decision comes as the U.S. economy faces a number of challenges, including high inflation, the war in Ukraine and a slowdown in China.
The Fed is hoping that its tightening cycle will help to bring inflation under control without causing a recession.
The central bank’s statement said that inflation had “eased somewhat” in recent months but remained elevated.
The Fed said it was highly attentive to inflation risks and would “act as appropriate” to bring inflation down to its 2% target.
The Fed’s decision is likely to have a number of implications for the economy and financial markets.
Interest rates are likely to rise further, which will make it more expensive for businesses and consumers to borrow money.
The Fed’s decision is also likely to put downward pressure on the stock market, as investors become more risk-averse.
The Fed’s decision is a sign that the central bank is taking inflation seriously and is willing to take steps to bring it under control.
However, the Fed’s tightening cycle is also likely to have a number of negative consequences, including a slowdown in economic growth and a higher risk of recession.
A summary of headlines we are reading today:
- Experts Predict Gold Prices Could Reach $2,000 By End Of Year
- Tesla Fires First Shot In EV Price War
- U.S. Imposes Sanctions On Firms Linked To Iranian Drone Supply Chain
- OPEC+ Will Not Change Output Policy Despite The Oil Price Plunge
- Financial conditions are tightening after SVB’s collapse and could slow the economy, Powell says
- Stocks slide following Fed’s rate hike, Dow sheds more than 500 points: Live updates
- Fed recap: All the market-moving comments from Fed Chair Powell after rate hike
- Bitcoin seesaws after Fed raises rates, and crypto firms turn to Swiss lenders: CNBC Crypto World
- Interest Payments On Treasury Debt Up 29% YoY
- Wall Street Reacts To Powell’s 25bps Rate Hike In The Middle Of A Banking Crisis
- Bond Report: 2-year Treasury yield dives below 3.95% during press conference by Fed’s Powell
Click on the “Read More” below to access these, other headlines, and the associated news summaries moving the markets today.
