Stocks End Mixed After Fed's Announcement On Rates

Plus 5 Just-Added Strong Buys Stocks End Mixed After Fed's Announcement On Rates [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks End Mixed After Fed's Announcement On Rates [Stocks End Mixed After Fed's Announcement On Rates]Image: Bigstock Stocks closed mixed yesterday after the Fed’s announcement on rates. As expected, the Fed paused on rate hikes yesterday, leaving the Fed Funds rate unchanged from their last meeting at between 5.00-5.25% (midpoint of 5.13%). But they surprised many by suggesting they could raise rates another 50 basis points if inflation remains elevated. There was a growing belief going into this meeting that they would raise rates by another 25 bps at their July meeting. But there was little talk on what would happen after that. Now we know what they are thinking. But Fed Chair, Jerome Powell stressed that "a decision has not been made," about a rate hike in July (even though the majority of members are expecting more hikes to come by year's end). One thing Mr. Powell seemed to want to make clear, is that "not a single person on the committee wrote down a rate cut this year." Although, they are still forecasting a full -1% cut in 2024. As for their growth forecast, they marked up their GDP estimates for 2023 to 1%, up from their previous estimate of 0.4%. And they marked down their unemployment forecast for 2023 to 4.1%, down from their previous estimate of 4.5%. But they marked up core PCE inflation to end the year at 3.9%, up from their previous estimate of 3.6%. Although, they left their forecast for next year at 2.6%. The Fed news overshadowed yesterday morning's better than expected Producer Price Index (PPI) which saw headline inflation fall -0.3% m/m vs. last month's 0.2%, and views for -0.1%. On a y/y basis it came in at 1.1%, well under last month's 2.3% pace, and 1.6% consensus. Core inflation (ex-food & energy) rose 0.2% m/m, in line with last month, and the consensus. On a y/y basis, it came in at 2.8% vs. last month's 3.2% and views for 2.9%. But the Fed's preferred inflation gauge is the core PCE (Personal Consumption Expenditures) index. And the latest core rate came in at 4.7% vs. last year's peak of 5.3%. Still a ways off from their targeted 2%. Carryover from yesterday's Fed meeting will likely be the biggest influence on trading for the rest of the week. My take is, I wouldn't read too much into any volatility over the next few days or week (assuming there is any). Stocks have soared over the last several weeks, and there's bound to be some profit taking. But aside from the Fed suggesting one more rate hike above and beyond what the market was already expecting, it doesn't change anything for the market in my opinion. If we are lucky enough to get a dip, I'd look to be a buyer, because it looks like there's plenty more upside to go. Especially for those tech companies at the center of the Artificial Intelligence (AI) revolution. One more or less rate hike isn't going to stop the transformation that AI is expected to have on the world. In fact, it could be just as transformative, or more, as the personal computer, the internet, and the mobile phone. To learn more about who is at the forefront of this technology and how to take advantage of it, be sure to read our latest commentary... [Capitalizing on the Boom in AI Software Development]( Best, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research Sponsor [The Ignored EV Story Few Investors Know About]( [image]( Lithium may grab all the headlines, but the average electric vehicle requires 146 pounds of the mineral graphite. 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