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Market indexes spent all trading day in the green for this Hump Day session, and felt encouraged enough by the Fed’s latest monetary policy overview — and later Fed Chair Jerome Powell’s press conference — to take levels higher. The Dow closed up +383 points, +0.92%, the S&P 500 grew +1.08%, the Nasdaq +246 points, +1.41%, and the small-cap Russell 2000 beat the field: +1.57%.

All four indexes are still in the red year to date, thanks to a weak February and early March. However, today marks the third up-day for the market out of the past four. The 10-year bond yield is down to +4.25% currently, more than 50 basis points (bps) below where it was raging roughly 10 weeks ago. The 2-year is nestled in at +3.98%.

FOMC Keeps Rates Steady; Powell Gives Benign Presser
 

As expected, the Federal Open Market Committee (FOMC) decided not to move on interest rates today, keeping Fed funds between 4.25-4.50% for what will be the fourth straight month. The statement mentioned the Fed has “penciled in” two rate cuts between now and the remainder of the year, but no more clearly drawn dot-plot strategy than that.

In both the Fed statement and Powell’s presser afterward, the language used was direct but rather vague in other instances, as well: the Fed is not forecasting a higher possibility of a recession based on proposed tariffs (a large share of which are expected two weeks from today, April 2nd), but Powell mentioned he had a “really high uncertainty” about the inflation outlook based on the tariffs.

The Fed will continue to allow Treasury securities to expire off its balance sheet going forward, but at a much lower rate of $5 billion per month versus $25 billion previously. Powell noted that more than $2 trillion has already been rolled off the budget. Mortgage-backed expirations will continue at the rate of $35 billion per month.

Ultimately, the Fed expressed it feels in a good place with interest rate levels where they are currently. “We’re not going to be in any hurry to move” in either direction of rates, Powell said in the press conference. That said, one reporter noted that this sentence had been removed from today’s press release: “The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance.” Powell’s trite reply? “It was not meant to be any signal.”

Basically, the Fed knows about as much as the rest of us do about how tariffs — if they really do go on at the levels currently promoted by the administration, or at all — will affect the economy. Clearly the risk for higher inflation will be there, which may induce a rate hike at some point, but for now the Fed will keep their “two cuts” in the mix going forward.

What to Expect from the Markets Tomorrow
 

Thursday mornings almost always bring us Weekly Jobless Claims data, and tomorrow is no exception. These are expected to tick up, but only to 225K — well within the range of a consistently healthy labor market. Philly Fed manufacturing for March is projected to come in lighter month over month but still in positive territory, which is to follow a worse-than-expected Empire State survey earlier this week. And Existing Home Sales for February are anticipated to dip below 4 million seasonally adjusted, annualized units.

Tomorrow also has an inordinate number of companies reporting quarterly earnings, as well. FedEx (FDX - Free Report), NIKE (NKE - Free Report), Micron (MU - Free Report), Lennar Homes (LEN - Free Report) and Olive Garden-parent Darden Restaurants (DRI - Free Report). This will give us an excellent cross-section of the broader economy, especially as it pertains to the consumer.

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