Wall Street eyes a dovish wait
U.S. stock indexes rise
Materials is weakest sector, energy and staples biggest gainers
STOXX 600 down 0.08%
Dollar edges up, gold down, oil flat, bitcoin up >2%
U.S. 10-year Treasury yield up at 4.63%
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WALL STREET EYES A DOVISH WAIT
Wall Street indexes were higher on Thursday with strategists interpreting Wednesday afternoon's Federal Reserve statement and Fed Chair Jerome Powell's press conference.
The market had suffered some mood swings on Wednesday after the central bank's updates, with the S&P 500 rising more than 1% on the day at one point before closing down 0.34%.
Sonu Varghese, Global Macro Strategist at Carson Group, said Powell’s remarks appeared dovish, as he implied the Fed's next move would be a rate cut.
But Varghese said investors who sold may have been focused on the idea that rates "remain higher for longer, at least until we get a series of soft inflation prints that gives the Fed more confidence that inflation is headed to 2%."
And until those prints materialize, Varghese expects more volatility while the market waits.
For now, Gene Goldman at Cetera Investment Management, said that while the Fed may not cut rates soon, Powell appeared to take one concern "off the market's worry list" by suggesting the Fed would not hike rates.
Also on the bright side, Carol Schleif, chief investment officer at BMO family office, said she saw the Fed's plan to slow its balance sheet reduction as "a moderate and welcome surprise."
But Schleif also sees the Fed sitting "steady and patient relative to moving on rates any time soon."
"In the meantime, data is coming in supportive of a bumpy but steady trajectory toward the Fed's long term goal of 2%," she said. "The employment picture is coming into better balance and consumer and business activity and sentiment is moderately optimistic versus wildly exuberant."
Interpreting changes in the Fed's written statement, Bill Adams, chief economist for Comerica Bank, wrote that the Fed will likely wait until September to kick off rate cuts. He expects two quarter percentage point rate cuts by the end of 2024.
Satyam Panday, chief U.S. economist at S&P Global Ratings, expects to wait even longer for a rate cut. The firm has moved expectations of a first rate cut to December from July.
Noting that the "cut is still conditional on economic growth and inflation pressures slowing," Panday says the Fed is "likely to pick up the pace of easing in 2025 as economic growth slows below potential." Their projection is for 100 basis points of cuts in 2025, to end next year at 4.00%-4.25%.
In S&P 500 industry sectors, the biggest loser was materials .SPLRCM while the biggest gainers were energy .SPNY consumer staples .SPLRCS.
Trading snapshot from 1027 ET (1427 GMT):
(Sinéad Carew)
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Wall Street rises as investors read Fed tea leaves https://tmsnrt.rs/4doojBv
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