U.S. Federal Reserve Chair Jerome Powell holds a press convention following a two-day assembly of the Federal Open Market Committee on rate of interest coverage in Washington, U.S., March 20, 2024.
Elizabeth Frantz | Reuters
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What it’s good to know as we speak
Wall Avenue rallies
U.S. shares rallied to a record close Wednesday after the Federal Reserve held interest rates and maintained plans to cut three times this year. The Dow jumped 400 points, or 1.03%. The S&P 500 gained 0.89%, hitting above the 5,200 level for the first time, while the Nasdaq Composite rose 1.25%.
Congress eyes U.S. funding into China
U.S. investments going into China is coming under more Congressional scrutiny, besides the recent move to essentially ban TikTok. After initial false starts, some in the House of Representatives are trying to move ahead on legislation to cut off the flow of American capital that’s allegedly funded China’s military development.
Reddit prices IPO
Reddit has priced its IPO at $34 per share, in the first major social media offering since 2019. The company, which hosts millions of online forums, sold 15.28 million shares, while existing shareholders sold an additional 6.72 million. According to a press release, the offering brought in $519 million, valuing the company at close to $6.5 billion.
Kuwait oil CEO on Red Sea crisis
The Red Sea crisis could lead to global tanker shortage, according to the CEO of Kuwait Petroleum Corporation. “One of the things I think we may be concerned about is if this continues for another six months, that we will not have perhaps the tanker fleet available to continue to go around,” Shaikh Nawaf al-Sabah told CNBC. Still, he added, he doesn’t see a supply disruption risk in the Middle East.
[PRO] Weight loss drugs
A new class of weight loss drugs could hit Swiss companies with strong exposure to food categories, according to Vontobel. The investment bank estimates the demand for these drugs will grow in the coming years despite the high costs. “Therefore, the most affected categories are snacks/confectionary, ‘fast food,'” the analysts said.
The bottom line
Wall Street liked what it heard from the Fed — that it’s sticking to three rate cuts for this year.
Fed Chair Jerome Powell and officials aren’t blinking yet and seem willing to cut rates as long as progress on inflation holds up.
The positive signal was reflected in sharp moves in markets, with all three major averages soaring to record closing highs. Investors heaved a sigh of relief as recent hot inflation data fueled worries it could result in fewer cuts than expected.
“Overall, though, the FOMC has stuck to its view that the underlying inflation picture is improving, notwithstanding the disappointing numbers in the past two months,” Ian Shepherdson, chairman and chief economist at Pantheon Macroeconomics said in a note.
“In other words, they view the most recent numbers as a temporary interruption rather than a change in the trend.”
Officials also sharply revised their GDP growth forecast for this year and now see the economy growing at a 2.1% annualized rate, up from the 1.4% estimate in December.
Mohamed El-Erian, Allianz chief economic advisor, said on X the Fed seems to be signaling important endurance in two methods.
First within the timeline to succeed in its 2% inflation goal, “indicating a willingness to tolerate increased inflation for longer,” and in addition within the timeline to succeed in its goal steadiness sheet measurement, demonstrated by the Fed’s openness to sluggish the quantity of quantitative tightening within the months forward, he added.
“The primary facet of endurance aligns with the objective of sustaining financial well-being, whereas the second displays a need to stop liquidity-related disruptions in market functioning,” he defined.
For now, Wall Avenue appears to have dodged a bullet and the Fed is not tossing out its script on charge minimize plans — at the least not but.