Market Watch: March 24, 2023

For the four trading days covered in this report, the Dow gained 243 points to close at 32,105, the S&P 500 gained 32 points to settle at 3,949, and the tech-heavy Nasdaq gained 157 points to close at 11,787. In Canada, the TSX climbed 72 points to end at 19,460.

Strategy

U.S. Fed raises interest rates by a quarter percentage point

The U.S. Federal Reserve (the Fed) raised interest rates by 25 bps yesterday. Although the decision was widely expected, events over the last two weeks had introduced some uncertainty about what policymakers would do. In light of the recent banking sector turmoil, the press release softened its stance regarding forward guidance, noting that “some additional policy firming may be appropriate.” This has replaced the previous phrase about “ongoing increases.” The Fed also released its Summary of Economic Projections. The 2023 median forecast for the Fed Funds rate was unchanged at 5.1%, indicating one additional rate hike for the remainder of this cycle at most. That said, policymakers remain at odds with the market as no participant forecasted rate cuts this year. Given that policymakers revised their inflation estimate higher and their unemployment forecast lower, the hurdle for easing appears significant. The Fed also confirmed that its quantitative tightening program would continue unabated, despite the recent swell-up in its balance sheet due to increased borrowing by banks through the Fed’s lending facilities

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by Scotia Wealth Management - The Zukiwsky Group

Market Watch: March 24, 2023

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