Wednesday Market Briefing 06-10 — Fed Day!

All eyes are on the Federal Reserve today as the central bank wraps up its June meeting.

At 2:00, the Fed will issue its official statement. This will be followed by a press briefing with Chairman Jerome Powell.

Investors expect a near 100% chance of the Fed leaving its target interest rate unchanged at the current range of 0.00% to 0.25%. Powell’s comments on future Fed asset purchases and the Fed’s outlook for the economy will be the primary focus.

Dow June Futures: Down 12 (0.04%)
S&P June Futures: Up 5.25 (0.16%)
Nasdaq June Futures: Up 80.75 (0.81%)

Big tech stocks are showing strength this morning as the Nasdaq composite crosses back over the 10,000 mark.

Meanwhile, the more diversified indices are essentially treading water ahead of the Fed meeting. After such a strong run from the March lows, it is actually healthy for stocks to take a breather here — possibly for a few weeks — before trying to forge new highs.

Gold June Futures: Up 8.90 (0.52%)
Silver June Futures: Down 0.28 (1.57%)

Gold is continuing to rebound ahead of today’s Fed meeting.

If the Fed indicates a willingness to continue buying securities at a robust pace, and indicates full support for economic recovery, this could be a very good thing for precious metal prices.

Gold continues to trade in a loose range between 1675 and 1800 which it has held since the first week in April. Silver is consolidating strong gains from the month of May.

10-Year Yield: 0.797%  
2-Year Yield: 0.189%

After breaking down last week, bond prices continue to consolidate below the recent range.

Watch for volatility in these rates as the Fed releases its announcement today. The volatility should continue through the Fed’s press conference as investors try to interpret comments and build expectations for how the Fed will proceed in the weeks and months ahead.

Breaking Morning News

This month, the Fed will resume setting projections for interest rates, economic growth and unemployment. (These projections were cut in March due to extreme uncertainty thanks to the coronavirus crisis.) The Fed has purchased more than $2 trillion in securities since the beginning of the pandemic and investors will want more clarity on what these asset purchases will look like going forward.

As lockdowns end and social distancing restrictions are eased, families are heading to theme parks for some entertainment. Stocks of these companies have been crushed by closures in recent months. But there is hope that profit could return depending on capacity levels and customer demand.

As large restaurant chains begin to open chains in different sates and regions, they’ve been met with a wide assortment of regulations. It’s becoming difficult to set a standard procedure for safeguarding employees and consumers given differing guidance in various locations.

Chart of the Day

 

If our economy is to fully recover, consumers will have to become comfortable getting back to a more normal life routine.

We’re making progress in that direction, but there’s still a long way to go.

Quote of the Day

The four most dangerous words in investing are: ‘this time it’s different.'” ~Sir John Templeton

Final Thoughts

I’m looking forward to hearing what Fed Chairman Powell has to say at the press conference today. The Fed has clearly been a big driver of the market’s recovery and now that stocks are back close to where they traded before the coronavirus crisis, it will be very important to watch how the Fed proceeds

Talk to you tomorrow!

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Zach Scheidt