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Stocks and Bonds Rally on Fed Comments Thumbnail

Stocks and Bonds Rally on Fed Comments

The Dow (+2.0%), NASDAQ (+2.9%), and S&P 500 (+2.3%) each posted nice gains for the week. These gains were fueled by a less-hawkish Fed than investors were anticipating. Meanwhile, taxable bonds gained about 0.2% - 0.7%,  while tax-free municipal bonds were relatively flat.  The 10-year Treasury yield fell 0.10% to end the week at 4.21%, explaining some of the cause for the increase in bond prices.

Investors were mainly focused this past week on Wednesday's Fed meeting, which turned out to be relatively uneventful with the Fed maintaining their stance on not cutting interest rates too soon. The Summary of Economic Projections showed that members still expect 3 interest rate cuts by the end of 2024, however they now expect fewer interest rate cuts in 2025. Their view on this stems from projections that the economy will be growing faster than anticipated in 2025. Chairman Jerome Powell noted that the Fed will continue to be patient in regards to interest rate cuts, and they will wait and see how the economy develops in the coming months.

One of our favorite market indexes, the Leading Economic Indicators (LEIs) rose for the first time since February 2022. While the Conference Board did note that consumer debt and elevated interest rates are weighing on consumer spending, the overall index rose and appears to no longer be forecasting a recession. Investors will continue to look for signs of inflation resuming its downward path and will have their eyes focused on the Personal Consumption Expenditures Price Index (PCE) that will be released on Friday. This figure is the Fed's favored index pertaining to inflation data.

Note that due to Good Friday this week, all American stock and bond markets will be closed on Friday. Happy Easter to those that will be celebrating this Sunday as well!

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

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