The S&P 500 is rolling into the FOMC meeting day having posted yet another record closing high. Given that, one might say that there doesn’t seem to be a lot of concern about what the market might see in the Fed’s dot plot today or what it might hear from Fed Chair Powell. Of course, therein lies the risk.<\/p>\n\n\n\n
Given some of the higher-than-expected inflation prints of late, the resurgence in oil prices, the speculative action in AI stocks and cryptocurrencies, and initial jobless claims still running close to 200,000, a market at a record high could be labeled as being too complacent.<\/p>\n\n\n\n
If the dot plot turns against the bullish-minded market, or Fed Chair Powell’s tone at his press conference turns more hawkish, and\/or the Fed’s discussion for its balance sheet plans doesn’t unfold in the supportive manner the market thinks it might, then the potential for an outsized, negative reaction increases.<\/p>\n\n\n\n
The focal point will be the dot plot, which in December showed a median estimate of three rate cuts before the end of 2024. The dot plot is part of the Summary of Economic Projections, which will be released at 2:00 p.m. ET along with the Fed’s policy directive. That directive is expected to indicate a unanimous vote to leave the target range for the fed funds rate unchanged at 5.25-5.50%. It will also contain some insight on the Fed’s quantitative tightening plans.<\/p>\n\n\n\n
Fed Chair Powell will conduct his press conference at 2:30 p.m. ET.<\/p>\n\n\n\n
The long and short of things (pun intended) is that today’s trading excitement could be reserved for the afternoon session.<\/p>\n\n\n\n
Currently, the S&P 500 futures are down four points and are trading 0.1% below fair value, the Nasdaq 100 futures are up 30 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are down 71 points and are trading 0.2% below fair value.<\/p>\n\n\n\n