Breakfast News: Markets Cheer Fed Decision
March 20, 2025
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Wednesday's Markets |
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| S&P 500 5,675 (+1.08%) |
| Nasdaq 17,751 (+1.41%) |
| Dow 41,965 (+0.92%) |
| Bitcoin $85,619 (+4.44%) |
1. Interest Rate Outlook Eases Investor Concern
The latest U.S. Federal Reserve meeting saw interest rates left unchanged, with the dot plot still showing the likelihood for two interest rate cuts this year, calming fears tariff-induced inflation could lead to fewer reductions than expected. Chair Jerome Powell's comments around a robust economy further helped to provide investor relief.
- "I would tell people the economy seems to be healthy": Powell said he understands sentiment has worsened, but believes economic activity hasn't. However, he did publicly cite tariffs as providing a high degree of uncertainty.
- Inflation rising but transitory?: Despite the dot plots showing a median forecast of two cuts this year (to 3.75-4%), eight members had projections higher than this rate banding, up from four in the December forecast. This shows more members see rates having to stay elevated to keep a lid on inflation.
2. Nvidia Targets the Future
Thursday's Quantum Day at Nvidia's (NVDA +2.16%) annual developers' conference is the highlight for many, with investors hoping to hear more on advancements in quantum computing and how to commercialize it.
- Opening session called "Quantum Computing: Where We Are and Where We're Headed": CEO Jensen Huang sent quantum stocks lower in January when he said practical quantum computers were still 15-30 years away. However, he'll be hosting fireside chats with partners today including D-Wave (QBTS +2.34%), with the stock up 416% in the past year.
- "We can easily see ourselves manufacturing several hundred billion of it here in the U.S.": Huang said the business was focusing on changing the supply chain from Asia to the U.S., with a growing amount of electronics to be made and procured locally in response to the impact of the President's trade policies.
3. Apple and Google Hit by EU Regulators
Antitrust charges announced yesterday by the European Commission on Apple (AAPL +1.07%) and Alphabet (GOOG +1.14%) could mean changes to their app stores and operating systems, as the bloc aims to tackle tech competition issues.
- "Self-preferencing" tactics: The commission has accused Alphabet of pushing its own services ahead of rival ones, preventing app developers from fairly reaching consumers. For Apple, it relates to providing more access to third parties on the iOS mobile operating system.
- "This is, quite simply, misguided": Oliver Bethell, Google's EMEA director for competition, feels the end result will make it harder for people to find what they are looking for on the app store. Apple said the move will wrap the business in red tape.
4. What to Watch on Thursday
Initial Jobless Claims data is forecasted to rise modestly to 224k versus 220k from last week. Existing Home Sales for February are expected to show a slight drop from the 4.08 million to 3.95 million.
- The second largest U.S. home construction company: Following the property data release, Lennar (LEN +0.49%) releases earnings after the closing bell. After facing higher material and labor costs, focus will be on how gross profit margins are holding up, along with management's assessment of homebuyer demand.
- Twice recommended in Stock Advisor during the Noughties: FedEx (FDX +1.26%) will report after the market closes, with investors watching for signs of recovering demand in international shipping volumes. Last quarter, freight volumes dropped 11%, with the business looking to pivot toward more profitable areas.
5. Foolish Fun
Nike (NKE +1.30%) will release Q3 earnings after the closing bell today. Keep an eye on commentary around performance from its digital and direct-to-consumer channels following significant declines last quarter, as well as updates on the turnaround strategy plus the collaboration with Kim Kardashian's SKIMS brand.
If you were the CEO of Nike for a day, and you can eliminate one competitor, who do you eliminate and why? Discuss with friends and family, or become a member to hear what your fellow Fools are saying!
