Fed Outlook in Focus When US Stocks Rally Takes Steam
The Federal Reserve meeting in the coming week will test the sharp rebound of the US stock market, with investors hoping the central bank is ready to continue to reduce interest rates in the coming months.
During a general meeting, the stock almost removed the decline set by President Donald Trump’s stroke tariff. The last S&P 500 SPX fell by about 1% since April 2, when the announcement of the “Liberation Day” tariff Trump sent a plunge shares and caused some of the most stable market swings in 50 years.
While the Fed is widely projected to withstand stable loan costs when giving a monetary policy statement on Wednesday, market prices show the hope that the central bank can cut immediately after June.
“The Fed is one of the few levers that can be drawn on time that can support market activity,” said Dominic Pappalardo, Head of Multi-Asset Strategy at Morningstar Wealth. “If they start signaling that their inflation problems are reduced, it shows that they are closer to slaughtering, and I think it will be well received by the market.”
Trump tariffs towering the policy decisions for central bank officials who consider concerns about the potential for economic decline in concerns that tariffs will encourage higher inflation.
This week’s data shows the US economy has been contracted in the first quarter for the first time since 2022, but many analysts discounted reports, said weaknesses were driven by import surges because businesses try to avoid higher costs than tariffs.
After cutting 1 point percentage last year, The Fed has held its benchmark rate of 4.25% -4.5% so far in 2025. Fed Futures Futures Funds are factoring in nearly four more 25 -Basis points in December, according to LSEG data.
The White House has increased pressure on the central bank to cut interest rates, with Trump strongly criticized Fed Chair Jerome Powell, who said Fed would wait for more data about the economic direction before changing interest rates.
Last month, Trump increased the possibility that he would try to fire Powell, get rid of market concerns about damage to Fed’s independence. Trump then looked backwards.
At the meeting next week, Powell “may continue to sound Hawkish to push back the narrative that the Fed will be influenced by the White House,” said Angelo Kourkafas, a senior investment strategy expert at Edward Jones.
Even after eight direct profit sessions, the S&P 500 still dropped by around 9% of the highest record of February. Last month, the benchmark index fell almost 20% below the peak.
Reports on company results over the past few weeks have generally exceeded expectations. With about two thirds of the S&P 500 reported, the company aggregate posted a revenue of 7.4% above expectations versus a long-term average of 4.3% above estimates, according to LSEG IBES.
Microsoft MSFT Megacaps shares and the Facebook Meta Meta Meta Platform were obtained on Thursday after the results, increasing the equity index. The results in the coming week including Uber Technologies Uber, Walt Disney Dis and Conocophillips Cop.
The development of trade will remain focused, with investors say market rebounds arise in optimism that tension subsides and that agreements with other countries are progressing. Trump on April 9 stopped the levies of large -country imports in many countries for 90 days, because the US negotiated with other countries. The move made the stock soaring.
“The market wants to see, and hope to see, some solid offers with some of our trading partners,” said Scott Wren, a senior strategist in the Global Market at the Wells Fargo Investment Institute.
“The market anticipates something, and it’s time for rubber to leave.”
Source: Reuters
