S&P 500 hits all-time above $5,200
The S&P 500 Index soared to new heights, surpassing the $5,200 mark for the first time following the Federal Open Market Committee’s (FOMC) decision to maintain current interest rates. This milestone highlights the bullish sentiment pervading the US stock market, as investors responded positively to indications that multiple rate cuts are still on the table for 2024.
Gold nears all-time high above $2,180
In the wake of the FOMC hinting at future rate cuts, gold’s value surged, nearing its all-time high above $2,180. The precious metal reasserted its status as a safe-haven asset, with investors flocking to gold amid expectations of a more accommodative monetary policy. This rally underscores gold’s appeal as yields on interest-bearing assets like Treasuries lower.
Fed holds rates unchanged, signals rate cuts are coming
During its recent meeting, the Federal Reserve chose to keep interest rates unchanged, with Chair Jerome Powell stating, “if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.” Powell’s hint at the likelihood of easing policy signals a cautious approach, but still more firm than markets expected. Recent data revealing strong inflation caused some worry that the Fed would refrain from lowering interest rates this year.
Fed consensus: 3 rate cuts in 2024
The Federal Reserve’s revised dot plot revealed an expectation for 75 basis points in rate cuts throughout 2024, indicating a collective anticipation of a more dovish monetary stance. This consensus among Fed officials is similar to their December dot plot, confirming that recent data has not deterred their strategy of navigating towards 2% inflation.
US dollar weakens on rate cut news
Following the Federal Reserve’s dovish stance, the US dollar experienced a downturn against major currency pairs, with EUR/USD climbing back above the 1.0900 threshold. This weakening is illustrative of the immediate impact that monetary policy signals can have on currency valuations, affecting international trade dynamics and forex trading strategies. The dollar’s movement in response to Fed decisions highlights the intricate interplay between central bank policies and global currency markets.