Chip Somodevilla
Wall Street's major averages rose on Wednesday as market participants took the Federal Reserve's updated dot chart and comments from Chairman Jerome Powell as confirmation that the central bank was done raising rates and might even start trimming them soon.
The Federal Reserve held its official interest rate steady, as widely expected. More importantly, it now forecasts 75 basis points of rate cuts in 2024. Additionally, Powell, in the post-decision press conference, said that talk of rate cuts was "clearly a topic of discussion" for policymakers. policy formulation.
With Powell's Q&A session underway, the blue-chip Dow (dji) advanced 1.24% to 37,032.33 points, surpassing the 37,000 mark for the first time and breaking a previous intraday record of 36,952.65 points. The tech-heavy Nasdaq Composite (IND COMP.) was higher by 1.42% to 14,739.28 points, while the benchmark S&P 500 index (SP500) was up to 1.39% at 4,708.37 points.
All 11 S&P sectors were now in the green.
Treasury yields fell after the updated dot chart and Powell's comments. The shortest return at 2 years (US2Y), which is more sensitive to interest rate movements, fell as much as 30 basis points to a session low of 4.43%. The long-term 30-year performance (US30Y) fell 12 basis points to 4.18%, while the 10-year yield (US10Y) fell 18 basis points to 4.02%.
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The central bank's monetary policy committee was virtually guaranteed to keep the official interest rate unchanged, and delivered in species. The highlight was the Federal Reserve's updated Summary of Economic Projections, which presented that the median forecast for the federal funds rate in 2024 fell to 4.6% from 5.1% previously. Additionally, the forecast for core personal consumption spending - the Fed's preferred inflation gauge - fell to 2.4% from 2.6%, and is projected to return to the 2% target in 2026.
"Some small changes to the (FOMC) statement that suggest the Fed is more convinced that real activity is slowing and, with it, inflation. It's a moderately dovish statement that explains the shift toward a more dovish stance." neutral," Justin Wolfers said. professor in the economics department at the University of Michigan, said on X (formerly Twitter).
"Latest set of Fed projections. Almost all the movement is in the 2023 numbers: this was a year that generated (a lot!) slower-than-expected inflation, even as growth was significantly stronger than expected "A Christmas miracle," Wolfers added. .
Powell at the press conference noted that the recent moderation of strong growth, the labor market's return to equilibrium and rising inflation were all good signs. When asked about the insertion of the word "any" in the policy statement, the Federal Reserve chair said the addition was an acknowledgment that policymakers believed they were "at or near" the peak of the current adjustment cycle.
Another batch of encouraging inflation data was released before the opening bell, with the Producer Price Index (PPI) for November remains unchanged. Economists expected an increase of 0.1%. The basic PPI, which excludes food and energy, also did not change. The PPI data comes a day after November's consumer price index reading came in slightly higher than expected.
Additionally, the Atlanta Federal Reserve's indicator of business inflation expectations for December it marked downwards.
As for Wednesday's active movers, Pfizer (PFE) was the largest percentage of losers in the S&P 500 (SP500), following updated guidance from the pharmaceutical giant that included the impact of its acquisition of Seagen (SGEN), upset investors.
E-commerce company Etsy (ETSY) was another of the S&P's biggest percentage losers after it said that dismissal 11% of your workforce.
