Wednesday’s stock market will find little direction until 2 p.m. Investors will wait for Fed Chair Powell to deliver the FOMC’s interest rate decision. Since Sept. 2023, markets priced in multiple 25 bps rate cuts.
The market is far too bullish.
This afternoon, the Fed will not cut rates. At best, it will comment on the core PCE, CPI, and jobs report, citing lower inflationary pressures to justify a rate cut sooner. Investors cannot predict the market’s reaction. The S&P 500, Dow Jones, Nasdaq (QQQ), and Russell 2000 (IWM) may sell off on profit-taking. It has an equal chance of rallying. Watch the 20+ Year Treasury (TLT) and the 10+ Year Treasury (IEF) today.
Expect bank stocks to react quickly after the FOMC meeting. JP Morgan (JPM), Citigroup (C), Wells Fargo (WFC), Truist (TFC), and PNC Financial (PNC) are some of the stocks that will attract traders today.
Food stocks will demonstrate volatility after the meeting. Starbucks (SBUX), which posted Q1/2024 revenue of $9.4 billion (up by 7.9%), needs lower interest rates. This stimulates the economy and increases consumer spending for Starbucks products. Conversely, Mondelez (MDLZ) may pull back. The firm posted positive Q4 results on Jan. 30. However, it issued weak guidance, citing slower expected sales in Asia and North America.
