The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
No biggie.
Futures traded up about 30 overnight but faded a little into our open. Overnight news wasn’t meaningful to markets and the S&P 500 opened the session around +15. It climbed gently for about an hour and then fell back to unch’d on the heels of disappointing tariff talk. The tape returned to the morning levels before giving back the gains, and then some, on the heels of the FOMC statement publication. The FOMC made no changes to policy, as widely expected, but mentioned that “the risks of higher unemployment and higher inflation have risen.” That struck markets as a hawkish tone and the S&P was -27 points at the intraday lows. The press conference lacked highlights but the repeated message was that the economy was fine, monetary policy was in a good position, and the Fed will wait-and-see before acting. That message inspired buyers and the index returned solid gains on the session. After the presser, bears pushed the index lower again, but the tape never misbehaved. Into the close, the index popped northward on a Trump announcement to rescind the Biden-era AI chip curbs.
As far as Fed days go, today was a snoozer. The Fed Chair deserves a pat on the back and the whole Committee is probably smiling at one another. Regardless of how individuals feel about preemptively cutting or lessening the slightly restrictive nature of rates or whatever, the entire market digested all of the Fed information today without fanfare. There are two possible conclusions from this empirical reality.
Whatever new information we learned from the Fed today, the market had appropriately anticipated it.
The Fed told us nothing new and the market was OK with that.
I think possibility #2 is the more likely explanation but the market reaction is what matters and the market went through perfunctory motions today.
So the investment landscape is unaltered and we move on to whatever might be new and significant, over the horizon.
Like the Fed, markets are waiting for economic data. Specifically we’re waiting on recession data and tariff talk.
We knew that yesterday and last week and last month. So in the larger sense today’s non-reaction to a Fed that did nothing, makes perfect sense.
See you tomorrow.
-Mike
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