In July 2024, the Federal Reserve kept the federal funds rate at 5.25%-5.50% for the eighth consecutive meeting. The decision aligned with market expectations. The central bank noted progress towards its 2% inflation target, though inflation remains somewhat elevated. Economic indicators suggest continued solid expansion, with job gains moderating and unemployment rising slightly but still low. 

The Fed believes risks to its employment and inflation goals are becoming more balanced. However, it doesn’t anticipate rate cuts until there’s greater confidence in the sustainable movement towards 2% inflation. During the press conference, Chair Powell discussed potential scenarios for 2024, ranging from multiple rate cuts to none at all. He suggested a September cut could be possible if inflation trends align with expectations. 

(Federal Funds Rate Levels) 

On Wednesday, major US stock indices closed higher as the tech sector rallied, led by chip stocks. The S&P 500 gained 1.58%, the Nasdaq rose 2.63%, and the Dow added nearly 100 points (0.24%). Markets reacted positively to the Federal Reserve’s latest interest rate decision and comments. 

Tech stocks dominated market performance. Nvidia surged 12.81% after Morgan Stanley named it a top pick, partially recovering from recent losses due to market rotation toward traditional economic sectors. AMD jumped 4.36% following better-than-expected results. Broadcom and Qualcomm rose 11.96% and 8.39% respectively, buoyed by reports that some foreign companies might avoid US export restrictions on chipmaking to China. However, not all tech stocks fared well. Microsoft lost 1.08% due to disappointing cloud results. 

(S&P 500 Index Monthly Chart) 

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