The Fed Provides Some Clarification

The market closed strong on Tuesday in anticipation of The Federal Reserve’s announcement on interest rates and the fate of our economy. Federal Chairman Jerome Powell announced Wednesday that additional rate hikes are unlikely. However, The Federal Open Market Committee (FOMC) left the target range for the federal funds rate unchanged. So rates are not moving up, but they aren’t moving down, either.

The Fed also announced it will slow the pace of unwinding its balance sheet inJune. This is quite different from what the Fed has been signaling since early 2023.  Even so, the market reacted positively with the Dow Jones Industrial Average soaring over 400 points, however, the exuberance didn’t last. The Dow Jones Industrial Average finished just $87 above its opening price and the S&P 500 closed $17 lower than its opening price. Though The Fed announced raising rates is unlikely, Powell gave no indication that rates will come down any time soon. It’s plausible that rates will not adjust down until early 2025.

Markets are volatile and earnings reports from several more bellwethers including Amazon, 3M, and Ely Lilly reported solid results. In contrast, Starbucks, Coca Cola, and McDonalds disappointed shareholders.  

Earning season is proving to be tough for many companies as they are reporting a slowdown in consumer spending. Along with many headwinds and a seemingly robust economy, we continue our cautionary approach to the market by maintaining above average cash balances for buying opportunities. If you have questions about your portfolio or want to learn more about our management, don’t hesitate to contact your OmniStar Advisor or our portfolio manager, Roger Fuller. 

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