Closing Recap

U.S. equities experienced a significant afternoon rally following the FOMC policy statement and Fed Chair Powell’s remarks, ultimately paring some gains into the close. Investors reacted favorably to the Fed maintaining its projection of two rate cuts in 2025, despite acknowledging increased inflation and lower growth forecasts.

Key Takeaways:

• US stocks jumped after the FOMC announcement, with tech stocks leading the advance.
• The Federal Reserve kept interest rates unchanged and reaffirmed its median expectation of two rate cuts in 2025.
• Chairman Powell suggested that tariff-related inflation is likely “transitory” and emphasized the importance of hard economic data.
• The Fed revised down its 2025 GDP growth outlook and increased its inflation and unemployment forecasts, but the market focused on the maintained rate cut outlook.
• Treasury yields initially rose but then declined post-FOMC, while the dollar and Bitcoin gained ground.

Market Overview:

U.S. stocks exhibited a dynamic trading session, showing modest gains in the morning before experiencing a significant upward swing following the 2:00 pm ET release of the FOMC policy statement. While the major indices briefly surpassed Monday’s highs, some profit-taking emerged in the final hour, leading to a slight pullback. Nevertheless, market breadth was positive, with a majority of S&P 500 sectors finishing in positive territory.

Index	Up/Down	%	Last
DJ Industrials	246.33	0.0059	41826
S&P 500	36.67	0.0065	5651
Nasdaq	159.88	0.0091	17665
Russell 2000	32.14	0.0157	2082

Economic Data:

The FOMC’s updated economic projections revealed a downward revision to the 2025 GDP growth forecast (from 2.1% to 1.7%) and upward revisions to both the unemployment rate (from 4.3% to 4.4%) and inflation (both overall and core PCE inflation increased by 0.2 percentage points to 2.7% and 2.8%, respectively). Despite these adjustments suggesting potential stagflationary risks, the market’s positive reaction indicated a focus on the Fed’s commitment to future rate cuts. 

Commodities, Currencies, and Treasuries:

Oil prices reversed earlier declines to close slightly higher, supported by the broader market optimism following the Fed announcements. WTI crude settled at $67.16 per barrel, while Brent crude finished at $70.78 per barrel.

Gold prices saw a minor increase to $3,041.20 per ounce. In the currency markets, the US dollar strengthened, and Bitcoin experienced a notable jump above $85,000. US Treasury yields, which had edged higher in anticipation of the FOMC meeting, retreated after the announcements, with the 10-year yield ending the day at 4.257%.

Asset	Up/Down	Last
WTI Crude	0.26	67.16
Brent	0.22	70.78
Gold	0.4	3041.2
EUR/USD	-0.0054	1.0888
JPY/USD	-0.31	148.95
10-Year Note	-0.023	0.04257

Looking Ahead:

Market attention will remain centered on the implications of the FOMC meeting. Investors will be scrutinizing upcoming economic data releases for confirmation of the Fed’s outlook and any potential shifts in their stance. Corporate earnings and geopolitical developments will also continue to influence market sentiment.