Stocks hit fresh all-time highs as the Federal Reserve did little to alter Wall Street’s bets that interest rates will drop at least twice in 2024 — even after the central bank’s more conservative outlook.

The S&P 500 topped 5,400 for the first time, with Wednesday marking the 20-month anniversary of the bull market. While Treasury yields did pare their slide after the central bank decision, Fed swaps continued to fully price in quarter-point rate cuts in November and December.

U.S. policymakers penciled in just one rate reduction cut this year and they now see four cuts in 2025. The Fed adjusted language in its statement, noting there has been “modest further progress toward the committee’s 2 per cent inflation objective.” Previously, the statement pointed to a “lack” of further progress. 

In the run-up to the Fed decision, data showed the core consumer price index cooled to the slowest pace in more than three years.

Wall Street’s Reaction to Fed:

  • David Russell at TradeStation:
    • This is a nothing-burger Fed meeting. They know conditions are improving, but don’t need to rush with rate cuts. The strong economy is letting Jerome Powell wring inflation out of the system without hurting jobs. Goldilocks is emerging — but policymakers don’t want to jinx it.
  • Neil Dutta at at Renaissance Macro Research:
    • The fact that there is only one cut penciled in for 2024 might lead to some speculation around path dependency.
    • Conditions can change. Today’s inflation data are laying the groundwork. This statement notes “modest further progress” on the Fed’s inflation goals.
  • Whitney Watson at Goldman Sachs Asset Management:
    • The Fed’s acknowledgement of ‘modest progress’ towards the 2 per cent inflation target likely stems from the disinflationary signals in May’s CPI data, which contrasts with the first quarter’s higher-than-expected inflation readings.
  • Quincy Krosby at LPL Financial:
    • This is most likely a function of not wanting to ease financial conditions unnecessarily as the data dependent Fed requires a series of cooler inflation reports before initiating a rate easing cycle. 
  • Sonu Varghese at Carson Group:
    • These ‘dot plot’ projections likely don’t account for the latest May inflation data, which was softer than expected and reversed some of the heat we saw in the first quarter. We still think the odds are high for two rate cuts in 2024 if the disinflation process continues, as we expect.
  • Krishna Guha at Evercore:
    • Certainly the Fed is showing there is no strong predisposition to cut in September and the data will have to make the case if that is doing to happen.
    • We take that seriously but nonetheless think there are reasons to underweight the dot-plot some.
    • We stick with our base case of two cuts starting September, premised on the notion May CPI release is the start of a sustained downshift in inflation. But the dot-plot underlines this is nowhere near a done-deal.
  • Bill Adams at Comerica Bank:
  • In short, the Fed made their decision-making process fairly clear coming into today’s meeting, and their policymakers are reacting to incoming data in a manner that is consistent with that process. If inflation continues to moderate, as has been the trend over the last year and a half, the Fed will start to cut interest rates in the second half of 2024.

Corporate Highlights:

  • Caterpillar Inc. hiked its dividend by about 8 per cent and added US$20 billion to its share buyback program after seeing strong performance from its division best known for making iconic yellow heavy-duty machinery.
  • FedEx Corp. plans to cut as many as 2,000 jobs in Europe, the latest move by the package-delivery giant to streamline its global workforce and rein in costs.
  • Southwest Airlines Co.’s chief executive officer is resisting pressure to step down after activist firm Elliott Investment Management took a $1.9 billion stake and called for new leadership at the carrier.
  • GameStop Corp. raised about $2.14 billion from a share sale program as it capitalized on a stock rally fueled by Keith Gill’s return to YouTube.
  • Airbus SE is closing in on a large single-aisle jet order from Cebu Pacific Air, with the carrier planning to sign up for as many as 150 A320neo aircraft that would more than double the Asian airline’s fleet size.
  • Investors in Adobe Inc. are increasingly on edge about competition from generative AI. The Photoshop maker’s results will illustrate how it’s coping with the threat.

Key events this week:

  • Eurozone industrial production, Thursday
  • U.S. PPI, initial jobless claims, Thursday
  • Tesla annual meeting, Thursday
  • New York Fed President John Williams moderates a discussion with Treasury Secretary Janet Yellen, Thursday
  • Bank of Japan’s monetary policy decision, Friday
  • Chicago Fed President Austan Goolsbee speaks, Friday
  • U.S. University of Michigan consumer sentiment, Friday

Some of the main moves in markets:


  • The S&P 500 rose 0.8 per cent as of 4 p.m. New York time
  • The Nasdaq 100 rose 1.3 per cent
  • The Dow Jones Industrial Average was little changed
  • The MSCI World Index rose 0.9 per cent


  • The Bloomberg Dollar Spot Index fell 0.2 per cent
  • The euro rose 0.6 per cent to $1.0806
  • The British pound rose 0.4 per cent to $1.2797
  • The Japanese yen rose 0.2 per cent to 156.84 per dollar


  • Bitcoin rose 0.3 per cent to $67,515.01
  • Ether rose 1.2 per cent to $3,528.95


  • The yield on 10-year Treasuries declined eight basis points to 4.33 per cent
  • Germany’s 10-year yield declined nine basis points to 2.53 per cent
  • Britain’s 10-year yield declined 14 basis points to 4.13 per cent


  • West Texas Intermediate crude rose 0.6 per cent to $78.34 a barrel
  • Spot gold rose 0.2 per cent to $2,321.36 an ounce