U.S. stocks indicate a lower open again on the back of near term selling that wiped out almost all of the gains in the S&P 500 index since election day. The Fed reduced interest rates by 25-basis points this week as expected, but unsettled investors after Summary of Economic Projections (SEP) laid out a clear case for why the central bank projected just two rate cuts for 2025 versus the four it forecast in September. Inflation forecasts have been adjusted higher and therefore, the projections for further rate cuts have been cut back, leading to a rise in 10-year Treasury rates. Powell alluded to an economy that is performing exceptionally well. However, the uncertain policy framework around international trade restrictions, immigration and fiscal spending complicates economic projections. The Fed’s goal of maintaining higher for longer rates is to apply enough pressure on consumer demand and business activity to gradually push inflation back to the bank’s 2% target without harming the jobs market or the economy more broadly.

Leading up to the FOMC meeting, equity market gains had become narrowly concentrated in a few mega cap technology names and sentiment was largely bullish. This unusually narrow and extremely crowded positioning may have exasperated the selling, tipping the balance of sentiment to the downside in the near term. 

Tune in live from 8 a.m. to 5 p.m. ET, or anytime, anywhere, on‑demand.

Or stream it via thinkorswim® and thinkorswim Mobile, available through our broker-dealer affiliate, Charles Schwab & Co., Inc

Please do not reply to this email. Replies are not delivered to Schwab Network. For inquiries or comments, please email [email protected].

See how your information is protected with our privacy statement. 

Charles Schwab and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions. Schwab Network is brought to you by Charles Schwab Media Productions Company (“CSMPC”). CSMPC is a wholly owned subsidiary of The Charles Schwab Corporation and is not a financial advisor, registered investment advisor, broker-dealer, or futures commission merchant.