US Fed Rate Decision Live Updates: All eyes on FOMC meeting and Powell’s comments

The US Federal Reserve has decided to keep the interest rates unchanged in the April FOMC Meeting.

The federal funds rate was left unchanged at the Federal Reserve’s May meeting, remaining in the 5.25%–5.50% range for the sixth time in a row. This is because persistent inflationary pressures and a tight labor market point to a stall in the process of bringing inflation back down to the 2% target this year.

Although inflation has decreased over the previous year, policymakers recognized that it is still high and that recent months have seen a noticeable lack of additional advancement toward the central bank’s objective. Additionally, the Fed stated that it will not lower the target range until it is more certain that inflation is steadily approaching the target.

The billion-dollar question remains unanswered – when will the Fed deliver the first cut?

Investors will pay particular attention to any comments made by Fed Chair Jerome Powell in the press conference today that could hint at when the Fed believes it is in the clear to begin cutting interest rates.

The inflationary pressures remain in the economy.

The US CPI data for March came in higher and even the PPI and PCE numbers are not favouring the Fed’s attempt to cut the rate.

In March, the Consumer Price Index increased 0.4 percent (monthly) and rose 3.5 percent over the last 12 months.

April 2024 CPI data are scheduled to be released on May 15, 2024.

Till then, the markets are expected to remain volatile amidst earnings data from companies, especially those from the tech and AI-led stocks.

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The U.S. Federal Reserve is expected to hold its benchmark overnight interest rate steady in the 5.25%-5.50% range at the end of a two-day meeting on Wednesday, with the release of a new policy statement scheduled at 2 p.m. EDT (1800 GMT). Fed Chair Jerome Powell will hold a press conference half an hour later.

With new economic projections from policymakers not due until the June 11-12 meeting, the statement and Powell’s comments will be the only guide to whether officials still expect to cut rates this year, and by how much, after inflation over the first three months of the year seemed to stall above the Fed’s 2% target.

Before policymakers begin to ease borrowing costs, they say they want to see more data confirming that inflation will continue to fall, even if slowly.

We are only a few minutes away from the Fed’s decision. Here’s what the markets know so far:

US Fed kept the policy rate unchanged in the range of 5.25% to 5.5% for the 5th straight meeting in March. Till last month, the Fed expected three rate cuts this year. Will it be 6th FOMC meeting without a rate cut?

The U.S. Federal Reserve is expected to hold its benchmark overnight interest rate steady in the 5.25%-5.50% range at the end of a two-day meeting on Wednesday, with the release of a new policy statement scheduled at 2 p.m. EDT (1800 GMT / 11.30 PM IST). Fed Chair Jerome Powell will hold a press conference half an hour later.

With new economic projections from policymakers not due until the June 11-12 meeting, the statement and Powell’s comments will be the only guide to whether officials still expect to cut rates this year, and by how much, after inflation over the first three months of the year seemed to stall above the Fed’s 2% target.

Before policymakers begin to ease borrowing costs, they say they want to see more data confirming that inflation will continue to fall, even if slowly.

(Reuters)

While the probability of rate cuts in 2024 was reduced from six to three before March CPI data was released, some now believe that only one cut will be made this year.

US Federal Reserve chair Jay Powell in a panel discussion alongside Bank of Canada Governor Tiff Macklem at the Wilson Center in Washington last month sent a clear message to the markets. Powell conveyed that it will probably take “longer than expected” for inflation to reach the central bank’s target of 2% to support interest rate cuts.

“The Federal Reserve will only cut interest rates once this year, and the next cut will not be until at least January 2025,” says CEO, Nigel Green of deVere. “We expect the Fed will delay a rate cut until the third quarter of this year. Then, we believe there will be a pause to assess the impact on the world’s largest economy of the cut,” adds Green.

Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance shares similar view – “We believe the Fed still has a bias to cut rates and they are likely to still cut interest rates by 25 bps in either July or September, but if the inflation data remains sticky then that may be the only rate cut we get this year.”

Here’s a recap of key data watched by the Fed:

JOB OPENINGS (Released May 1, next release June 4)

Powell has kept a close eye on the U.S. Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) for information on the imbalance between labor supply and demand, and particularly on the number of job openings available to each person who is without a job but looking for one. The ratio fell in March to 1.32, the lowest level since the summer of 2021 and nearing the 1.2-to-1 level seen before the health crisis.

INFLATION (PCE released April 26; next release CPI May 15):

The personal consumption expenditures (PCE) price index, which the Fed uses to set its inflation target, accelerated to a 2.7% annual rate in March, up from 2.5% in the prior month. Core inflation stripped of volatile food and energy prices rose 2.8%, matching the rise in February.

Neither number is likely to boost confidence among Fed policymakers that inflation will steadily return to the central bank’s target. But neither will it set them back from thinking the jump in inflation early this year may just have been a “bump” on the way to lower price pressures. The March numbers had already been anticipated by Powell in earlier remarks, and the release of the data matched his expectations.

The Consumer Price Index (CPI) accelerated in March to a 3.5% annual rate versus 3.2% in February, a blow to Fed officials hoping for signs inflation would resume its decline after progress stalled at the start of the year. Core prices, excluding food and energy costs, rose at a 3.8% annual rate, the same as in the month before.

The CPI numbers led investors to push back to September their expectations for an initial Fed rate cut, and they now see only two quarter-percentage-point cuts this year. Rising gasoline and shelter costs again contributed the bulk of the CPI increase, defying hopes among some policymakers that housing inflation is on the verge of a steady decline.

RETAIL SALES (Released April 15; next release May 15):

Consumer spending rose more than anticipated in March, and upward revisions to earlier data again defied expectations that stressed households would pull back and slow the economy. Data for March showed retail sales rose 0.7%, more than twice the figure projected by economists in a recent Reuters poll.

The unexpected jump is likely to add to already growing sentiment among Fed officials that there is no urgent need to cut rates in an economy that is showing little sign of buckling under the pressure of current credit conditions.

EMPLOYMENT (Released April 5; next release May 3):

U.S. firms added a larger-than-expected 303,000 jobs in February, and employment gains in the previous two months were revised up by 22,000. The unemployment rate fell unexpectedly to 3.8%, marking the 26th straight month below 4% – the longest such run since the 1960s – and prompting Richmond Fed President Thomas Barkin to remark: “That’s a quite-strong jobs report.”

Takeaway: Fed officials have become more comfortable with the idea that continued strong job growth could still allow inflation to fall, especially if the supply of labor keeps growing and wage growth eases. Both did in March: The workforce grew by 469,000, the most since last August, and annual wage growth eased to 4.1%, the lowest rate of increase since June 2021. Still, that rate is above the 3.0%-3.5% range that most policymakers view as consistent with the Fed’s inflation target.

(Reuters)

José Torres, Senior Economist at Interactive Brokers shares his view on the Fed action today:

As we all wonder about the specifics of policymakers’ discussions during the Fed’s two-day meeting, the importance of today’s press conference following Powell’s presentation is escalating for market participants.

From the beginning of the year to today, rate expectations have shifted significantly; we’re down from seven estimated cuts to only one for 2024, as economic and inflation data has surprised to the upside all year on an aggregate basis.

Another important consideration will be plans for tapered quantitative tightening (QT), or the process of the Fed allowing Treasuries and mortgage-backed securities to roll off their balance sheet without replacing them at a more subdued pace.

Powell is especially attentive to these liquidity risks, as he probably perceived himself as too draconian when rates spiked in 2019 due to scarce bank reserves. Presently, however, there may be room for a positive surprise, with yields and stocks effectively setting up for a hawkish Powell. An upside case may flourish if the chair constantly reminds us that despite his firmness, the committee has the tools to acutely loosen financial conditions if the labor market turns.

Ruslan Lienkha, chief of markets at YouHodler, a Swiss-based Web3 fintech platform view on US economy.

The economy has been under the pressure of high rates for some time and is doing quite well now, but as time goes by, problems and stress in some industries will accumulate. We see problems in the banking sector and commercial real estate. However, the situation is currently controllable. The latest selling pressure in the US financial market shows adjusted expectations about a possible number of rate cuts until the end of the year. Thus, it is supposed that it would be much harder for the market to grow in the near future.

We are nearing the moment when we finally see a divergence in the actions of the FED and ECB. Supposedly, the ECB will start softening earlier than it does in the US because the macro situation is different. Europe faces a fast-growing risk of recession that will force authorities to take some action shortly.

As the Federal Reserve’s policy committee comes to a close today, participants are expected to affirm that cutting interest rates in 2024 and beyond will be done gradually and cautiously.

Ruslan Lienkha, chief of markets at YouHodler, a Swiss-based Web3 fintech platform views on US Fed’s rate action today:

The Fed will leave the rate unchanged this week due to persistent elevated inflation. I believe that the rate is at its peak right now; the only question is how long the Fed will keep it at its current level before starting to cut. Depending on the inflation trajectory, the softening may start in a few months or even next year. Only two months ago, the financial market expected the first cutting in June, but the chances of it are evaporating as the inflation has remained between 3% and 4% for almost one year without a clear downgrade dynamic.

Two recent data releases point towards the US Fed’s advantage.

Firstly, the ISM Manufacturing PMI in the United States fell to 49.2 in April of 2024 from 50.3 in the earlier month, firmly below market expectations of a stall. The data reflected a contraction in the US manufacturing sector, failing to maintain earlier traction as the prior month pointed to the first expansion in 16 months.

Secondly, the number of job openings declined by 325,000 from the previous month to 8.488 million in March 2024, reaching the lowest level since February 2021 and missing the market consensus of 8.690 million.

The S&P 500 dipped by 0.14% Wednesday, while the Nasdaq declined by 0.10% and the Dow Jones rose by 0.3%, as investors redirected their attention to the impending policy announcement from the Fed, alongside grappling with disappointing corporate earnings reports and a deluge of economic data.

CVS nosedive by 18% as the healthcare firm revised down profit projections due to escalated medical expenses. Starbucks sunk almost 16% after the company revised its annual sales forecast down after experiencing a dip in same-store sales for the first time in three years.

Also, chipmakers faced downward pressure, propelled by AMD’s lackluster forecast for AI chip sales and Super Micro Computer’s Q3 revenue falling short of expectations. On the data front, April saw US private employment growth surpassing expectations, while the manufacturing sector unexpectedly contracted, and the job openings declined to a three-year low in March.

Consumer spending in the first quarter varied among firms reporting earnings this morning. PayPal noted resilient spending, while Coca-Cola, 3M and McDonald’s experienced weakening sales to differing degrees. José Torres, Senior Economist at Interactive Brokers shares the performance report of these major firms:

PayPal said consumer spending has been strong and that its first quarter payment volume jumped 14% y/y. Earnings and revenue both surpassed analyst consensus expectations, and the company increased its guidance for both metrics. PayPal’s earnings guidance fell below last year’s result, which was aided by the one-time event of the company selling Happy Returns.

Coca-Cola’s first-quarter earnings and revenue exceeded analyst consensus expectations despite the company experiencing flat sales volume in the US. Globally, its sales volume, which is a metric based on units sold rather than dollar values and exchange rates, climbed 1%, while its sparkling soft drinks, like Coca-Cola, climbed 2%.

Its revenue climbed from the company hiking prices by 15%, with a significant portion of the increase driven by hyperinflation in Argentina. Coca-Cola said it anticipates additional price hikes in markets experiencing strong inflation. It said it expects earnings for the full year to increase in the low-to-mid single-digit range.

McDonald’s earnings and same-store sales missed analyst consensus expectations. CEO Chris Kempczinsk says consumers are being increasingly selective with their day-to-day spending, which is creating challenges for fast-serve restaurants. For the quarter, same-store sales increased by 1.9%, missing expectations of 2.6%. Sales were also challenged in Israel due to boycotts started after the company rolled out discounts for the country’s soldiers.

3M Co. said its revenue declined 3% y/y and missed the analyst consensus estimate while earnings exceeded forecasts. Sales of consumer products were weak as individuals focused their spending on food, traveling and other services. Despite having spun off its healthcare division, the company, which is well known for its Post It products, expects sales this year to range from flat to 2% y/y.

The Federal Open Market Committee will conclude its two-day April policy meeting today, before publishing a policy decision at 2 p.m. Eastern. Fed Chairman Jerome Powell will deliver remarks at a press conference slated to kick off at 2:30 p.m.

Bill Adams, Chief Economist for Comerica Bank shares his thoughts on the upcoming FOMC meeting.

Hot inflation data (Employment Cost Index) will set the tone for today’s monetary policy statement by the Federal Reserve. The Fed is expected to say that recent signs of persistent inflation mean the central bank needs to keep interest rates high for longer.

The policy statement and Chair Powell’s comments in the press conference will reiterate the Fed’s resolve to get inflation back to its 2% target.

Barring a major crisis, a rate cut looks off the table before September, and even that is less likely than it seemed a few weeks ago given recent data demonstrating a broad-based increase in prices of services, houses, and labor costs in early 2024.

While interest rates will stay unchanged at today’s decision, the Fed is expected to announce a plan to slow the pace of their balance sheet run-off.

The Fed zeroes out the cash they receive in those repayments, reducing the amount of money in the financial system and economy. This is called Quantitative Tightening or QT because it reverses the Fed’s Quantitative Easing program, the nickname of the Fed’s purchases of these bonds.

The US central bank is expected to maintain record-level borrowing costs amidst indications of stalling disinflation in the country, with investors eagerly awaiting Powell’s remarks for insights into potential rate cuts later this year. Attention will also be on key economic data, including ADP national employment figures, ISM Manufacturing PMI, and JOLTS job openings.

Jeffrey Roach, Chief Economist for LPL Financial shares his views on the Conference Board’s Consumer Confidence Report for April released recently.

Macro Quicktake: Confidence Fell the Lowest Since July 2022

Consumer confidence in April fell the lowest since July 2022 amid frustratingly high consumer prices and a slowing labor market.

Getting a job become harder to get as job opportunities were less plentiful in April, suggesting the labor market is beginning to cool.

Plans to buy big-ticket items faded in April as consumers appeared to be a bit more cautious about the outlook.

Consumers have fewer vacations planned, which could foreshadow a slowdown in demand for restaurants and hotels.

Takeaway: Consumers have a more cautious outlook with fewer vacations planned and less demand for big ticket items. Softer consumer demand would certainly release some inflationary pressure, giving investors and policy makers some reprieve on rate expectations. We should still expect a decent jobs report on Friday but don’t be surprised if it comes in softer than previous reports.

Ahead of the US Fed decision on the interest rates, here’s some bad news for the central bank.

Data released just now shows private businesses in the United States added 192,000 workers to their payrolls in April 2024, exceeding market expectations of a 175,000 increase and following a previous gain of 208,000.

Hiring was broad-based, with the service-providing sector adding 145,000 jobs, led by leisure & hospitality (+56,000), trade, transportation & utilities (+26,000), education & health services (+26,000), professional & business services (+22,000), and financial activities (+16,000).

Additionally, the goods-producing sector added 47,000 jobs, with boosts in construction (+35,000), manufacturing (+9,000), and natural resources & mining (+3,000). Meanwhile, annual pay for job-stayers was up 5.0% year-over-year in April, little changed from the previous month. Pay growth for job-changers eased to 9.3% from March’s 10.1%, but remained higher than it was at the beginning of the year.

While the US Fed FOMC meeting updates are awaited, here’s something from earnings results.

In the premarket, AMAZON shares are up almost 2% following the company’s Tuesday earnings and revenue report, which exceeded expectations.

Operating income increased by more than 200% to $15.3 billion over the previous year. To $10.4 billion, net income also more than tripled.

During the quarter, advertising income increased by 24%, surpassing that of cloud computing and retail. Amazon Web Services exceeded forecasts with a 17% increase in sales. The company’s broad cost-cutting efforts, fulfillment operational adjustments, and stabilization of cloud spending all contributed to the earnings gain.

US stock index futures declined Wednesday as investors processed disappointing corporate earnings reports and adopted a cautious stance ahead of the Fed’s upcoming policy announcement. Futures linked to the S&P 500 were down 0.5%, Dow Jones futures fell 0.3%, and Nasdaq futures slipped 0.8%.

Chipmakers faced downward pressure following AMD’s uninspiring forecast for AI chip sales, compounded by Super Micro Computer’s Q3 revenue falling short of expectations. Additionally, Starbucks revised its annual sales forecast downward after experiencing a decline in same-store sales for the first time in three years.

The US Federal Reserve is expected to keep its policy rate in the 5.25%-5.50% range at the end of its two-day policy meeting on Wednesday, as persistent inflationary pressures and a tight labor market indicate a halt in progress toward lowering inflation back to its 2% target this year.

Investors are eagerly awaiting views from Chair Jerome Powell, seeking to determine the impact, if any, of recent inflationary trends on the likelihood of near-term interest rate decreases.

Investors now expect a 25 basis point drop at the September meeting, with probabilities approximately even.

Furthermore, the probability of no rate decreases from the current range has climbed to almost one in every four.

Will US Fed Chair Jerome Powell sound hawkish or dovish or will maintain the current stand, in the press conference today?

Here’s what Amit Goel, Co-Founder & Chief Global Strategist, Pace 360 says:

The Federal Reserve’s battle with inflation stands at a critical juncture, with this year’s high readings possibly just a temporary anomaly. While current indicators hint at inflation veering off course, the prudent approach is to rely solely on data for confirmation. We are of the opinion that the economy is cooling and we will see start of disinflationary readings very soon possibly in the summer itself.

Expectations lean towards Fed officials maintaining steady rates in today’s meeting, especially with the latest data points showing a rise in labor costs and a lower unemployment rate (3.8% in March, down from 3.9% in January and February).

It’s anticipated that Jerome Powell will strike a hawkish tone during the post-meeting news conference and we anticipate he will signal that all options remain open, including the possibility of rate hikes should the data warrant such action. Today’s could possibly be the last hawkish stand by Powell before the cooling economy forces him to sound dovish again in the next meeting.

“Almost all Federal Reserve officials from Chair Jerome Powell down have said they don’t expect to start cutting rates until they see more evidence that inflation is headed in the right direction and back towards the 2% target. US rates are set to be held steady again. The focus will be on Powell’s speech after the announcement. We expect a hawkish tone and this will add pressure to the emerging-markets central banks to raise rates,” says Nigel Green, CEO and founder of deVere Group.

London’s FTSE 100 index edged up by 0.2% to 8,160 points on Wednesday amid subdued trading activity, remaining close to the recent record high of 8,200 points reached on Tuesday, as investors remained cautious as they awaited insights from the upcoming US Federal Reserve policy decision, particularly regarding potential rate adjustments later in the year.

In corporate news, GSK revised its full-year profit forecast upwards and anticipated higher sales in the first half of 2024 compared to the latter half of the previous year. However, Aston Martin reported a larger-than-expected pretax loss for Q1, while Smith & Nephew fell short of market expectations for Q1 revenue.

British retailer Next sustained its annual profit forecast following a 5.7% increase in Q1 full-price sales. Conversely, Domino’s Pizza Group observed a slower start to the second quarter after reporting decreased sales and a decline in orders during Q1.

April turned out to be a bad month for US equity markets. S&P 500 and Dow 30 indices ended the month down by nearly 3.30% while Nasdaq 100 dipped by almost 4%.

US markets closed in a sea of red on Tuesday, marking Wall Street’s worst month in 2024, as new labor data came in hotter than expected. Investors await the Federal Reserve’s imminent interest rate decision.

US equity market futures are trading lower and leading indices are in red, ahead of today’s FOMC meeting decision.

The dollar edged towards its highest level this year against a basket of peers and U.S. share futures dipped on Wednesday ahead of a Federal Reserve policy decision, though trading was thin with many European and Asian markets closed.

The dollar gained over 0.5% on Tuesday on all six currencies that make up the dollar index, leaving the gauge at 106.49, a whisker off its highest since November.

The euro was under pressure at $1.0664, heading back to its mid April five-month lows, while the pound was at $1.2488.

The latest move higher in the dollar came with after hotter-than-expected first-quarter U.S. employment cost growth on Tuesday, which sent Treasury yields higher and caused markets to further pare bets on Fed rate cuts this year.

Traders are currently only pricing in one rate cut in 2024.

The Fed is almost certain to hold its benchmark overnight interest rate steady later in the day, but a policy statement issued at 2 p.m. EDT (1800 GMT) and Chair Jerome Powell’s press conference half an hour later should provide insight into how deeply – if at all – a stretch of three lost months in the inflation battle has affected the likelihood that borrowing costs will fall any time soon.

(As per Reuters)

The US stock market‘s rally attempt stalled as a rising employment cost index generated new inflation concerns. The major indices are testing resistance as they anticipate the Fed meeting, as well as significant earnings and economic data.

Compensation costs for civilian workers increased 1.2 percent for the 3-month period and 4.2 percent for the 12-month period ending in March 2024.

Compensation costs for private industry workers increased 4.1 percent over the year. In March 2023, the increase was 4.8 percent. Wages and salaries increased 4.3 percent for the 12-month period ending in March 2024 and increased 5.1 percent in March 2023.

Takeaway: Inflationary pressure continues to exist in the economy making US Fed’s task more difficult.

Given the elevated levels of inflation, which are expected to be the new normal by 2024, the market will have to let go of its expectations for Fed rate decreases anytime soon.

There’s a legitimate risk that there will be no US interest rate cuts by the Federal Reserve this year, warns the CEO of one of the world’s largest independent financial advisory and asset management organizations.

The warning from Nigel Green of deVere Group comes as the Federal Reserve’s primary inflation gauge, the core PCE (personal consumption expenditures) price index rises to 2.7%, above expectations of 2.6%. Core PCE inflation was 2.8%, above expectations of 2.6%.

The deVere CEO comments: “This data represents another blow for the Federal Reserve and its battle against inflation.

“The latest reading from the Fed’s preferred gauge, PCE, underscores how inflation remains hotter than previously expected, despite the high interest rates which are being used as a weapon to try and cool it.”

Green continues: “With the US economy defying expectations by consistently remaining strong, with a strong labor market, rising PPI and CPI, and with today’s PCE, among other recent data, we are now revising our rate cut forecast. Therefore, as it stands, there’s a considerable risk that they will not feel comfortable about cutting rates before 2025.”

Takeaway: As interest rates are likely to remain elevated for a longer duration than previously anticipated, investors need to recalibrate their portfolios to mitigate risks and capitalize on emerging opportunities.

Globally inflation seems to be trending down. After raising rates, now central banks are getting ready to cut them to boost economic growth. The first major economy to cut rate may not be America.

The European Central Bank (ECB) and the Bank of England (BoE) appear poised for interest rate cuts, while the Federal Reserve in the United States remains steadfast in the face of a surprisingly resilient economy. This is the view of Nigel Green, CEO and Founder, deVere Group.

The most interesting thing happened in Japan. The Bank of Japan ended its eight-year period of negative rates in March and announced the first rate rise since 2007. At its April meeting, the bank left its benchmark short-term interest rate constant at roughly 0% to 0.1%.

All eyes will be on Chair Jerome Powell and his messaging during the press conference today after the rate decision is announced.

The US Commerce Department’s latest report showed solid consumer spending last month, providing some solace to financial markets rattled by concerns about stagflation after data showed prices rising and economic growth slowing in the first quarter.

Talk of Stagflation in the US may be out of place. During Stagflation, there is slow economic growth amidst high inflation and a high rate of unemployment. All these factors seem to be in the control of the US Fed as of now.

Takeaway: Being an election year, a lot will depend on how the economic numbers are interpreted. President Joe Biden is fighting to convince inflation-weary voters that the U.S. economy is healthy. “America has the best economy in the world …” said Biden recently in a statement.

Is the US economy on the right track? The University of Michigan consumer sentiment for the US was revised lower to 77.2 in April 2024 from a preliminary of 77.9, and compared to 79.4 in March which was the highest level since July 2021. Both current conditions (79 vs 79.3 in the preliminary estimate) and expectations (76 vs 77) declined more than initially expected.

Overall, consumers continue to express uncertainty about the future trajectory of the economy pending the outcomes of the upcoming election, but at this time there is no evidence that global geopolitical factors are at the forefront of consumers’ minds”, according to Surveys of Consumers Director Joanne Hsu. Meanwhile, inflation expectations for the year ahead were revised higher to 3.2% from 3.1% while the five-year outlook was confirmed at 3%.

The US Fed’s aggressive action on rate hikes was supposed to bring down employment in the economy and, thereby, increase the unemployment rate.

However, the unemployment rate in the United States dipped to 3.8% in March 2024 from the previous month’s two-year high of 3.9% and exceeded market expectations, which had forecasted the rate to remain unchanged. The number of unemployed individuals decreased by 29,000 to 6.4 million, while employment levels saw a significant surge, rising by 498,000 to reach 161.5 million.

Additionally, the labor force participation rate increased to 62.7% from a near one-year low of 62.5% in the preceding periods, and the employment-population ratio climbed to 60.3% from 60.1%.

Despite recent policy tightening measures by the Federal Reserve, the unemployment rate has remained within a narrow range of 3.7% to 3.9% since August 2023, suggesting the labor market remains strong.

Takeaway: A healthy labor market may result in price increases, which is not good news for the US Federal Reserve, which is looking for factors that may prompt them to decrease interest rates.

In regular trading on Tuesday, the Dow fell 1.5%, the S&P 500 dropped 1.6% and the Nasdaq Composite declined 2%, with all 11 S&P sectors finishing lower. Those losses came as bond yields jumped after the first quarter’s employment cost index came in higher-than-expected, stoking fears that the Fed could keep borrowing costs higher for longer

US stock futures edged lower on Wednesday as investors geared up for the Federal Reserve’s policy decision. Dow futures fell 0.1%, S&P 500 lost 0.2% and Nasdaq 100 futures dropped 0.4%. In extended trading, Amazon gained more than 1% on better-than-expected first-quarter earnings and revenue. Meanwhile, AMD (-7%) and SMCI (-10%) tumbled on disappointing quarterly results.

Wall Street has little doubt policymakers will hold the Fed’s benchmark interest rate at its 23-year high today. All eyes will be on Chair Jerome Powell and his messaging during a press conference tomorrow after the rate decision is announced.

America slows down! US economy grew at its slowest pace in nearly two years as per the latest growth numbers. The fall in GDP growth rate can easily be attributed to the rate hikes introduced by US Fed in the American economy.

The US economy expanded an annualized 1.6% in Q1 2024, compared to 3.4% in the previous quarter and below forecasts of 2.5%. It was the lowest growth since the contractions in the first half of 2022, the advance estimate showed.

A slowdown was seen for consumer spending (2.5% vs 3.3%), mainly due to a fall in goods consumption (-0.4% vs 3%) while spending on services rose faster (4% vs 3.4%). Non-residential investment also eased (2.9% vs 3.7%), due to structures (-0.1% vs 10.9%) while investment in equipment rebounded (2.1% vs -1.1%) and the on intellectual property products (5.4% vs 4.3%) accelerated.

Looking further, government spending rose way less (1.2% vs 4.6%), and exports slowed sharply (0.9% vs 5.1%) while imports soared (7.2% vs 2.2%).

Takeaway: A slowdown in GDP growth is a good sign for the US Federal Reserve to begin decreasing interest rates.