US stocks closed higher overnight, and extended their near-term consolidations. Investors were somewhat relieved that Fed maintained its outlook for two rate cuts this year. However, the central bank also introduced a note of caution, warning in its statement that “uncertainty around the economic outlook has increased” and that it remains “attentive to the risks to both sides of its dual mandate.”
In the post-meeting press conference, Chair Jerome Powell explicitly addressed the impact of tariffs. He warned that “the arrival of tariff inflation may delay further progress” on disinflation. He also noted that Fed’s quarterly summary of economic projections does not show further downward progress on inflation this year, attributing this to new tariffs coming into effect.
This acknowledgment reinforces the stance that while rate cuts remain in the pipeline, the timing and extent of policy easing will depend on how inflation evolves in the face of trade disruptions and supply chain adjustments.
Fed left its benchmark interest rate unchanged at 4.25-4.50%, a widely expected move. Fed fund futures now assign roughly 70% probability that the next rate cut will come in June, compared to just 47% a month ago.
Technically, S&P 500 turned into consolidations after falling to 5504.65 last week. 55 W EMA (now at 5596.07) could offer some support for a near term recovery. But risk will stay on the downside as long as 55 D EMA (now at 5873.77) holds.
On resumption, fall from 6147.43, as a correction to the rise from 3491.58, should target 38.2% retracement at 5132.89.
