Stocks Soar After Fed Pauses And Talks Rate Cuts In 2024

Market Moves You Need to See Stocks Soar After Fed Pauses And Talks Rate Cuts In 2024 [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Soar After Fed Pauses And Talks Rate Cuts In 2024 [Stocks Soar After Fed Pauses And Talks Rate Cuts In 2024]Image: Bigstock Stocks soared yesterday after the Fed left rates unchanged, and signaled rate cuts were coming in 2024 (and more than previously expected). All of the indexes were up by 1.37% or more, while the small-cap Russell 2000 led the way with 3.52%! But it was the Dow that finally made new all-time highs yesterday, eclipsing their old peak from 23 months ago in January 2022. Yesterday's FOMC announcement saw the Fed pause on rates, as expected. While Fed Chair, Jerome Powell, left open the possibility of further rate hikes if inflation were to come back, he said "it's not likely we will hike again." The Fed also estimated they would cut rates 3 times next year (presumably by 25 basis points each time for a total of 75 basis points), which was 1 more rate cut than their previous estimate of just 2 rate cuts next year. As for when that will begin, that was left up in the air. Mr. Powell said that the timing of the rate cuts "is really the next question." And that they will be discussing this topic at future meetings. Going into yesterday's announcement, many traders had been forecasting 4-5 rate cuts (100 to 125 basis points). The Fed's estimated 3 rate cuts or 75 bps was less than many had been, and still are expecting. But it was notable that the Fed increased their stance. Additionally, many believed the rate cuts wouldn't likely start until May of next year. But after yesterday, that timeline has moved up to March for many. Here's the rest of the Fed's projections: they see 3 rate cuts in 2024; 4 rate cuts in 2025; and 3 rate cuts in 2026. That would put the Fed Funds midpoint at 4.63% in 2024; 3.63% in 2025; and 2.88% in 2026. They estimate inflation (currently at 3.5% y/y) will end under 3% by year's end. They expect it to fall to 2.4% in 2024; 2.1% in 2025, and 2.0% in 2026. They expect GDP to finish at 2.6% for the year in 2023; 1.4% in 2024; and then 1.8% in 2025. And they expect the unemployment rate, currently at 3.7%, to rise to 4.1% in 2024 and 2025. The market loved what it heard. The rate hike cycle appears over. The pivot to rate cuts is coming. And it's looking like the often mocked soft landing is happening right before our eyes. Things can change. But that is what's happening at the moment. In other news, yesterday's Produce Price Index (PPI) was mostly ignored. But it's worth mentioning that it too (just like the previous day's CPI) showed inflation on the decline. The headline number came in at 0.0% m/m vs. last month's -0.5% and views for 0.1%. The y/y rate fell to 0.9% vs. last month's 1.3% and the consensus for 1.0%. The core rate (ex-food & energy) was flat at 0.0% m/m vs. last month's 0.0% and views for 0.2%, while the y/y rate fell to 2.0% vs. last month's 2.4% and estimates for 2.2%. And MBA Mortgage Applications rose 7.4% w/w with purchases up 3.5% and refi's up 19.4%. Today we'll get Weekly Jobless Claims, Retail Sales, Import and Export Prices, and Business Inventories. Stocks have been on a tear. And the Q4 rally looks like it has a lot more upside to go. And 2024 looks like it too is poised for another fantastic year. So make sure you're taking full advantage of it. See you tomorrow, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research [Get Your Free Copy of Finding #1 Stocks - A $49.95 Value]( Starting today, you can claim a free copy of Finding #1 Stocks by Zacks' EVP Kevin Matras. You don't even have to pay for shipping! 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