IXIC: Nasdaq Barely Ends in Green After Fed Keeps Rates Flat and Warns of Big Inflation Risks

Tech-loaded index was the only survivor in yesterday’s market confusion as traders reacted to projections of two cuts this year, but also — the inflation narrative is still very much alive.

🎁 Nasdaq Books Tiny Gain

• The Nasdaq Composite index IXIC ticked higher and just enough to make it out in the green on Wednesday following the Federal Reserve’s interest rate decision. As expected, the central bank held rates unchanged at the current 4.5% level. That was all priced in.
• But what wasn’t, was Powell’s message, which shifted from a wait-and-see mode to an open “we don’t know what happens next” stance. When it comes to tariffs, Powell said, the Fed will keep monitoring how they unfold and what effect they have on the economy.
• What’s likely to happen, the Fed boss told journalists, is for inflation to flare up again. “Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs because someone has to pay for the tariffs,” Powell said.

💸 Inflation Expectations on the Rise

• With that firm message on rising prices, the Nasdaq was able to withstand the selling pressure and lock in the modest gain of 0.1%, or 25 points. The S&P 500 skittered down 2 points and the Dow Jones Industrial Average declined 44 points.
• Powell’s conference didn’t bring any hope that the July meeting will see rates drop. Instead, he pushed back against markets’ expectations that rates should drop sooner than later.
• “We haven’t been through a situation like this, and I think we have to be humble about our ability to forecast it,” Powell said. The Fed meets four more times this year, meaning that if the guidance stays intact, two of these rate-setting meetings should be rate-dropping.

📢 Reactions and a Day Off

• Reactions outside the stock market were mixed but nothing out of ordinary. The US dollar gained because higher rates help sustain its ability to yield handsome returns on deposits while fixed-income assets stay relatively attractive.
• Gold prices XAUUSD tumbled and so did Bitcoin prices BTCUSD. The precious metal dipped to $3,360 per ounce, down from $3,400. The digital gold swung lower to $103,000 but then pared back the loss and actually clocked a session win, up 0.3% to $105,000 per coin (but off its session highs).
• Stocks won’t open for trading Thursday due to the Juneteenth holiday, giving equity bros some time to sit back and relax. Trading continues as usual on Friday.