Mid-Week Market Minute 3.20.24

Stocks Higher This Week; FOMC Meeting Ends Wednesday

U.S. stocks were higher in early trading this week ahead of the highly anticipated FOMC meeting and announcement on Wednesday afternoon. On the heels of a few hotter-than-expected inflation reports over the past couple of weeks, markets will parse through the FOMC announcement and comments from Federal Reserve Chair Jerome Powell for any hints at the future path of interest rates.

Heading into the FOMC announcement on Wednesday, the markets are nearly certain the Fed will leave benchmark interest rates unchanged. In addition to announcing its interest rate decision, the central bank also will update its quarterly summary of economic projections alongside its unofficial forecasts of interest rates via the dot plot. When the dot plot was last updated in December 2023, the “dots” anticipated three rate cuts in 2024. Using futures as a guide, three rate cuts currently is what the markets are anticipating for the remainder of the year as well, which would leave the benchmark interest rate around 4.75% by year-end. Our expectation is that Powell will remain committed to cutting interest rates at some point this year but continue to stress the need for more progress on the inflation front. 

In other news, the White House announced this week that Intel was awarded more than $8 billion in CHIPS Act funding as the part of the administrations initiative to bring semiconductor manufacturing to the U.S. Separately, lawmakers and President Biden announced on Tuesday an agreement to fund the government through the end of September, just days ahead of the March 22 deadline. If the bill passes, the government will avoid shutdown talks until a new fiscal year 2025 budget needs to be implemented at the end of September (Forbes).

Source: GSAM, CNBC, JPMorgan, Forbes

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