Fed Keeps Interest Rates Unchanged, Drops References To Future Hikes, Dampens Hopes For Near-Term Cuts (UPDATED)
Portfolio Pulse from Piero Cingari
The Federal Reserve kept interest rates unchanged at 5.25-5.5% during its first 2024 meeting, signaling an end to the rate hiking cycle. The Fed's statement omitted references to future hikes and dampened expectations for near-term rate cuts, stating a reduction would only be considered once there is greater confidence in inflation moving sustainably toward 2%. Market reactions included a slight rise in the dollar, a marginal decline in stocks, and a decrease in the probability of a March rate cut from 54% to 46%. The SPDR S&P 500 ETF Trust (SPY) and iShares Russell 2000 ETF (IWM) saw slight declines, while Bitcoin also fell.
January 31, 2024 | 7:19 pm
News sentiment analysis
Sort by:
Descending
NEGATIVE IMPACT
The iShares Russell 2000 ETF (IWM) experienced a 0.5% drop after the Fed's announcement, suggesting a negative impact on smaller cap stocks due to the unchanged interest rates and reduced likelihood of near-term rate cuts.
The decline in IWM may be attributed to investor concerns that steady rates without cuts could constrain economic growth, particularly impacting small-cap companies.
CONFIDENCE 80
IMPORTANCE 65
RELEVANCE 70
NEGATIVE IMPACT
The SPDR S&P 500 ETF Trust (SPY) fell 0.2% following the Fed's decision to maintain interest rates, indicating a cautious investor response to the central bank's stance on inflation and rate adjustments.
The slight decline in SPY reflects immediate market reaction to the Fed's decision, which could lead to a short-term negative impact on investor sentiment and equity prices.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80