Powell Declares Mission Accomplished

The Fed cut the federal funds rate (FFR) by 50bps today. This marks the end of the Fed’s monetary policy tightening cycle that started during March 2022, which was aimed at bringing inflation back down to 2.0% even if that caused a recession. Inflation isn't quite there yet, but it is close enough. So today, in his presser, Fed Chair Jerome Powell reiterated that the Fed's main focus now is to keep a lid on the unemployment rate.

In response to the Fed's statement at 2:00 p.m., the S&P 500 rallied to a new record high of 5674 by 2:30 p.m. when Powell's presser started. As he spoke, however, stocks turned down and closed lower on the day as the 10-year Treasury yield rose above 3.70%. We still expect the stock market to climb to new record highs after the November presidential election. Now that the Fed is stimulating the economy, the hard-landing crowd should disperse.