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Happy Fed decision day to all who observe. After Tuesday’s as-expected inflation numbers, the market has settled on the idea that the Fed will skip a rate hike at the meeting, and according to market strategist Charlie Bilello, the Fed has done exactly what markets expected at every meeting since 2009.
Wall Street banks are updating their targets for the year as the calendar turns toward the summer solstice. The latest comes from Deutsche Bank, the first Wall Street bank that called for a recession, back in April 2022.
“We have consistently argued over the last 2-3 years that the U.S. is heading for its first genuine policy-led boom-bust cycle in at least four decades. The inflation we see was induced largely by expansive fiscal and monetary policy, and the aggressive rate hikes needed to tame that have now materialised. Avoiding a hard landing would be historically unprecedented,” said David Folkerts-Landau, chief economist.
That recession view is echoed elsewhere, so much so that Folkerts-Laundau mused whether the bank should now take a contrarian, more optimistic stance on the economy. “However, things are going to script for our Q4 recession timeline. We’ve been careful not to bring it forward as monetary policy works with a lag and U.S. consumers are still winding down excess pandemic savings. These will not be depleted until nearer year end.”
What’s notable however is that Deutsche Bank also is sticking to its call for the S&P 500 to reach 4,500 — the same near-the-top-of-the-Street outlook as Goldman Sachs, which says the U.S. should avoid a recession.
Read: MarketWatch’s round-up of Wall Street S&P 500 views
That’s even as Deutsche Bank has pointed out another catalyst has played out, with investor positioning more or less back to normal. “If earnings remain robust, so will buybacks, and equities should continue to grind higher,” the German bank says.
Bond yields, meanwhile, won’t go much lower even as recession arrives because of the higher-for-longer stagflationary world, they say. They see the 10-year U.S. Treasury at 3.35% by the end of the year.
The markets
U.S. stock futures edged higher before the Fed decision. The yield on the 10-year Treasury was 3.81%. The dollar slipped.
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The buzz
Get for ready for your heart to “skip” a beat when the Fed announces its latest interest-rate decision at 2 p.m. Chair Jerome Powell’s press conference follows a half hour later. Ahead of that, producer price data will get released, the last input ahead of the Fed decision.
UnitedHealth and other health insurance stocks may see pressure after its chief financial officer flagged that pent-up demand for outpatient care activity may drive up costs. UnitedHealth is a component of the Dow Jones Industrial Average
Nvidia closed with a market cap over $1 trillion on Tuesday, continuing its run since showing that artificial intelligence demand will boost earnings this year.
Meanwhile, Advanced Micro Devices unveiled its chip designed for AI workloads.
Logitech stock slumped as the computer peripheral maker said its longtime chief executive was leaving.
Regional bank Fifth Third Bancorp guided for worse revenue than it previously expected in an investor presentation.
Vodafone and CK Hutchison Holdings agreed to merge their U.K. cell phone arms in a deal that will leave Vodafone with 51% control of the operation.
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Top tickers
Here are the most active tickers on MarketWatch as of 6 a.m. Eastern.
| Ticker | Security name |
| Tesla | |
| GameStop | |
| Manchester United | |
| Nvidia | |
| Nio | |
| AMC Entertainment | |
| Apple | |
| Palantir Technologies | |
| Advanced Micro Devices | |
| Alibaba |
The chart
Not everything AI instantly turns to gold. Robert Sassoon, senior research analyst at Water Tower Research, looked at so-called De-SPACs, when a special purpose acquisition company completes its merger or acquisition. While Symbotic’s performance has been stellar, many other AI-themed De-SPAC have fizzled.
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