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Markets sprang back to life on this first(?) day of spring (I always thought it was the 20th or 21st), coming off more down trading days this month than up days so far (save the Dow, which has 7 up days and 5 down since March 1st). The Dow has its biggest trading session in almost a month, +320 points or +0.83%, while the S&P 500 notched a fresh all-time closing high today: +0.56% to 5178. The Nasdaq and small-cap Russell 2000 gained +0.39% and +0.49% today, respectively.

Citing recent behavior by the market ahead of a big news event the following session — whether it be a major jobs report, CPI, earnings for a market-moving stock, etc. — today’s successful trading day is at odds with what we’ve seen lately: a tepid, if not somewhat bearish, trading day ahead of said “big news.” Tomorrow, this will be the Fed’s decision on interest rates and, likely more consequentially, a new “dot-plot” on future moves the Fed plans to take.

Back in December, the Fed plotted out three interest rate cuts for 2024, which the market quickly interpreted to roughly double, beginning in March. This is the March meeting that began today and finishes tomorrow at 2pm ET with the new interest rate decision — it will be unchanged; we’ve all seen too much evidence of an economy able to cope with 5.25-5.50% to expect a cut any longer. The key will be what the dot-plot says, and when it starts: will it be June, as widely expected (still)? And if there is a further sense of reluctance to lower rates (we’ve been at these levels for eight-straight months so far), how will the market react to that?

Well, perhaps if market participants are still overweight NVIDIA (NVDA - Free Report) and its partners, maybe it won’t matter so much. Yesterday’s GPU Tech Conference had NVIDIA CEO Jensen Huang deliver the keynote address, where he name-dropped smaller partners in next-generation simulation and generative A.I. (Ansys (ANSS), software integration for next-generation semiconductors (Synopsis (SNPS   - Free Report) and building a new “super computer” with NVIDIA chips (Cadence Design Systems (CDNS - Free Report). With NVDA shares +28% in the past month, +85% year to date, +245% in the last year and +1914% over the past five years, if any company can create its own market, NVIDIA can.

Going back to the Fed’s meeting tomorrow, even if a June start to the new dot-plot and three cuts in 2024 remain intact, Fed Chair Jerome Powell’s tone in the presser following the release will be key. A more rigid attitude from Powell, or even a more vague and wistful one, can affect how late-day trading tomorrow will commence. The best-case scenario is that the Fed agrees to look for the soonest opportunity to cut rates — not all the way back down to 2%, but that which gets the ball rolling downhill — and then keeps its eyes and ears open for signs of strain in the economy from there.

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