Stocks Rise As Interest Rates Remain Unchanged

Good afternoon,

The Dow (+1.2%), NASDAQ (+0.2%), and S&P 500 (+0.5%) each gained slightly for the week. Taxable bonds gained 0.5% and tax-free municipal bonds gained 0.3%, as the 10-year Treasury declined 0.07% to end the week at 4.25%.

Last week was highlighted by the Federal Reserve deciding to keep interest rates unchanged. While this move was widely expected, the Fed’s statement after the meeting reflected more uncertainty moving forward. The Summary of Economic Projections, or more commonly known as the “Dot Plot”, was released as well and showed a reduced expected growth rate in the US economy down to 1.7%, while raising the expected core inflation rate to 2.8%. While this move showed that the Fed has no greater insight into the potential impact of increases in tariffs, it did hint at a dovish stance by the Fed for 2025 by keeping the potential for two interest rate cuts on the table. It is also worthy to note that Fed Chairman Powell believes that an inflation bump due to increased tariffs would likely be transitory.

Retail Sales numbers were also released last week and showed that sales increased 0.2%. While this number came in below expectations, it was an improvement over last month’s 1.2% decline. The “control group”, which provides a more stable and reliable measure of underlying consumer spending by excluding more volatile categories, rose by 1.0% which exceeded expectations. This report helped ease concerns that upper-income consumers are struggling, however the data is still suggesting that the lower end consumer is under pressure. This Friday we will have the release of the Fed-favored inflation gauge which will be looked at closely for signs that tariffs are having an impact on prices.

Have a great day and terrific week!

^{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.}