Fed

Last month, the Federal Reserve surprised markets by forecasting no rate hikes for this year. In December, the Fed projected two rate hikes for 2019.

Could the Fed Change Its Dovish Stance as Sentiments Improve?

Ready to put your morning scrolling to use? Sign up for Bagels & Stox, our witty take on the top market and investment news straight to your inbox! Whether you’re a serious investor or just want to be informed, Bagels & Stox will be your favorite email.

In its March policy statement, the Fed said, “information received since the Federal Open Market Committee met in January indicates that the labor market remains strong but that growth of economic activity has slowed from its solid rate in the fourth quarter.” The Fed also added, “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”

Economic data

Over the last month, we’ve seen a slight improvement in global as well as US economic indicators. China’s first-quarter GDP was better than expected, and analysts have been upwardly revising the US first-quarter GDP forecast. As economic indicators improve, the Fed might review its position of no rate hikes for 2019. However, in our view, the Fed might continue to be dovish for a while longer and wait for more evidence that global economic recovery is sustainable. A mistimed rate hike could potentially jeopardize the fragile recovery in financial markets.

Markets

The Fed’s dovish stance and optimism over US-China trade talks have been among the prominent factors driving the market rally. The S&P 500 (SPY) has gained 15.9% YTD. Semiconductor ETFs also made a 52-week high last week. Intel (INTC) and Qualcomm (QCOM) have respectively gained 25.4% and 42.0% YTD. NVIDIA (NVDA), Advanced Micro Devices (AMD), and Broadcom (AVGO) have seen upwards price action of 39.7%, 49.9%, and 26.4%, respectively, this year.

Latest articles

19 Jul

Afya's IPO Sees Strong Listing Gains

WRITTEN BY Mohit Oberoi, CFA

Afya (AFYA) listed on the Nasdaq Global Select Market on July 19. The company priced its IPO at $19 per share.

19 Jul

What to Watch For in Amazon's Q2 Earnings

WRITTEN BY Sanmit Amin

e-Commerce giant Amazon (AMZN) is scheduled to report its second-quarter earnings results after the closing bell on July 25.

19 Jul

Barrick Gold Reaches Deal to Buy Acacia Mining

WRITTEN BY Anuradha Garg

After a long standoff, Barrick Gold (GOLD) and Acacia Mining (ABGLF) have reached an agreement.

19 Jul

Comcast Shares Pop on Goldman's Optimism

WRITTEN BY Ruchi Gupta

Comcast (CMCSA) shares popped after Goldman Sachs issued a positive note on the company recently. Goldman upgraded its rating for Comcast to "buy" from "hold."

19 Jul

Why Analysts Are Bearish on Netflix Stock

WRITTEN BY Aditya Raghunath

Netflix stock fell over 10.0% on Thursday and is down 0.5% today as well.

On Thursday, pet retailer Chewy (CHWY) reported its first-quarter results after the market closed. The company reported its earnings for the first time.