Stock Market Update

[BRIEFING.COM] The S&P 500 (+2.40%) is in "last" place on Wednesday afternoon, up about 159 points following the release of the FOMC's March 17-18 meeting minutes.

The March minutes show a Fed that remains data-dependent amid elevated uncertainty, particularly driven by developments in the Middle East and AI-related business disruptions. Almost all participants supported keeping the federal funds rate unchanged at 3.50–3.75%, viewing the current stance as broadly consistent with neutral, while one member preferred a modest cut to support labor demand. Several participants highlighted the potential value of "two-sided" language in future statements, reflecting that rates could move higher if inflation remains above target or lower if economic conditions soften.

Participants judged the labor market to be broadly in balance, with the unemployment rate steady near 4.4% and low job growth roughly in line with slower labor force expansion. Payroll gains have been modest, though risks remain skewed to the downside amid AI-related uncertainties and potential global shocks.

Inflation remains a central focus, with total PCE running above 2% and near-term pressures amplified by higher oil prices. Participants generally expect inflation to gradually return to the 2% target over the next year, though timing remains uncertain. Some noted that the ongoing Middle East conflict and elevated energy costs could delay progress, while AI-driven productivity gains and decelerating housing services inflation may ease pressures.

Economic activity continues at a solid pace, supported by resilient consumer spending, household wealth gains, and strong business investment. The Fed staff projects real GDP growth roughly in line with potential, with unemployment gradually moving toward its longer-run natural rate and inflation trending toward 2% by the end of next year.