Last Updated: 4:24 PM EST
Stock indices finished today’s trading session in the green. The Nasdaq 100 (NDX), the S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) gained 1.3%, 1.08%, and 0.92%, respectively.
Earlier today, the Federal Reserve announced that it will reduce its balance sheet at a slower pace starting in April while keeping interest rates unchanged at the 4.25% to 4.5% range. The central bank will also lower the monthly cap on Treasury runoffs from $25 billion to $5 billion but will maintain the cap on mortgage-backed securities at $35 billion.
Chair Jerome Powell pointed out that tightness in money markets was a factor in the decision but noted that this change should not impact the balance sheet’s size in the medium term. The Fed has been gradually reducing its holdings since June 2022 through quantitative tightening (QT), and the latest adjustment allows it the flexibility to accelerate the process once the debt ceiling issue is resolved.
At the same time, the Fed reaffirmed its plan to cut interest rates twice in 2025, which was consistent with its previous projection from December. However, the updated economic forecasts in its Summary of Economic Projections show a slightly weaker outlook, with an increased inflation and unemployment rate forecast and a lowered economic growth projection. Fed officials expect the Fed funds rate to decline to 3.9% by the end of the year and further to 3.4% by 2026.
Meanwhile, Wall Street remains divided on when QT should end, as officials had previously provided little guidance on their timeline. Nevertheless, the Fed’s cautious approach to reducing its balance sheet and lowering interest rate cuts highlights the economic uncertainty that is present in the financial markets.
First Published: 5:04 AM EST
U.S. stock futures edged higher early Wednesday, as investors looked forward to the Federal Reserve’s interest rate announcement. Futures on the Nasdaq 100 (NDX), the Dow Jones Industrial Average (DJIA), and the S&P 500 (SPX) were up 0.12%, 0.07%, and 0.09%, respectively, at 5:03 a.m. EST, March 19.
Tuesday’s trading session saw a significant downturn, ending a two-day winning streak. The Dow Jones, the S&P 500, and the Nasdaq Composite (NDAQ) dropped 0.6%, 1%, and 1.7%, respectively.
In major stock market news, Tesla (TSLA) declined 5.3% after RBC Capital Markets lowered its price target on the stock due to concerns about rising competition in the electric vehicle sector and TSLA’s self-driving technology. Also, BigBear.ai (BBAI) was down 14.9% after it disclosed a delay in its 10K filing.
Investors are now focused on the central bank’s interest rate decision. While the Fed is expected to maintain current interest rates, market participants are closely monitoring the Fed’s updated economic projections and rate policy outlook.
The Fed’s forecasts for interest rates, GDP, inflation, and unemployment will provide key insights into the central bank’s assessment of the economy and its future policy direction. This data holds importance given the current market uncertainty.
Meanwhile, the U.S. 10-year treasury yield was up, floating near 4.291%. Simultaneously, WTI crude oil futures are trending lower, hovering near $66.45 per barrel as of the last check.
Elsewhere, European indices opened lower today ahead of the Bank of England and U.S. Fed’s interest rate decisions.
Asia-Pacific Markets Ended Mixed on Wednesday
Asia-Pacific indices were mixed today as investors awaited the outcome of the Federal Reserve’s policy meeting.
At the same time, China’s Shanghai Composite and Shenzhen Component indices declined 0.1% and 0.32%, respectively. Also, Japan’s Nikkei index was down 0.25%, while the Topix index was up 0.45%. Further, Hong Kong’s Hang Seng Index gained 0.12%.
Interested in more economic insights? Tune in to our LIVE webinar.
Questions or Comments about the article? Write to editor@tipranks.com