Stocks Closed Lower After FOMC Announcement, Focus Back On Earnings And Friday's Jobs Report

Plus 5 Just-Added Strong Buys Stocks Closed Lower After FOMC Announcement, Focus Back On Earnings And Friday's Jobs Report [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Closed Lower After FOMC Announcement, Focus Back On Earnings And Friday's Jobs Report [Stocks Closed Lower After FOMC Announcement, Focus Back On Earnings And Friday's Jobs Report]Image: Bigstock Stocks closed lower yesterday following the Fed's announcement on rates. Actually, stocks traded higher immediately after the announcement, building on intraday gains, but turned lower during Jerome Powell's press conference. There was no surprise on rates. They raised by 25 basis points as expected, putting the Fed Funds rate at a midpoint of 5.13%, which is consistent with the Fed's previous terminal rate forecast. The outlook on future rates was not as concrete as hoped. But it seemed likely they would be pausing on further rate hikes for the June meeting, at least, assuming the absence of any surprise data that could undermine that. For the May FOMC statement, the Fed notably removed the language from their March statement that read, 'the Committee anticipates additional policy firming may be appropriate,' and replaced it with, 'the Committee will closely monitor incoming information and assess the implications for monetary policy...in determining the extent to which additional policy firming may be appropriate.' Similar statements, but the key difference was that in March they said they anticipated additional firming, whereas this one said they will monitor information, i.e., not anticipating additional firming, but not necessarily off the table. But if you listen carefully to Mr. Powell's press conference, he inferred that a pause was likely. While he did say that "A decision on a pause was not made today," he went on to say that the Fed had "moved a long way," and that they could "afford to look at the data and make a careful assessment." He added "there is a sense we are much closer to the end than the beginning," and that "we feel like we are close, or maybe even there." Regarding a recession, he said he thought the "case of avoiding a recession is, in my view, more likely than that of having a recession." Although, he added, if there was a recession, he would expect it to be "mild." All in all, I thought the announcement and press conference were largely what the market anticipated. We didn't get the unequivocal declaration that they are officially calling it quits, but it's unrealistic to expect such a thing. Nonetheless, the case was made pretty strongly that a pause is likely. The biggest disconnect still seems to be what the futures traders are expecting (which is a rate cut as early as September), and what the Fed continues to insist (which is no rate cuts until next year). But the futures market has been wrong before, and so has the Fed. So we shall see. But September is a long way off, and we'll have two more Fed meetings before then: June 13-14, and July 25-26. The market will turn its attention back to earnings today with as many as 588 companies set to report, including Apple after the close. Then on Friday, the market will pivot to the Employment Situation report. In the meantime, stocks continue to trade near their 2023 highs. In spite of the uncertainty surrounding inflation and interest rates -- the economy and the markets have proven to be quite resilient. But it has not been without volatility. But it's worth noting that some stocks have a history of doing well during times of uncertainty. And those are dividend paying stocks. 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