As expected, the Fed left interest rates unchanged at the conclusion of today's FOMC meeting, but the Fed's statement released at 2:00 pm as well as Fed Chairman Jerome Powell's subsequent press conference gave more information about where interest rates are going into 2024. Although Fed officials expect one more rate increase this year, they see rate CUTS starting next year, but not as many as they had previously suggested - they are now predicting only two quarter point cuts in 2024. Equity markets did not seem to like this slightly hawkish news. The broad stock market rallied into the afternoon but fell sharply after 2:00 pm and closed with significant losses. Will this market recover from today's news of fewer upcoming rate cuts? Probably, but markets are nervous right now, and even small things could trigger a major sell-off. We'll remain on the sidelines as we wait and see how prices move into the end of the week. We may look to buy if at least one of our market indices (DOW, S&P 500, NASDAQ) can stay above its August low.
Hawkish rhetoric from the Fed usually boosts the U.S. Dollar Index, and today the greenback rallied back up from its three day decline. This put a damper on gold and silver prices which rallied early in the day, but then fell sharply to close with small losses. We were expecting a reversal in precious metal prices, so let's see if this downturn gains any legs over the next few days. We are still on the sidelines of both gold and silver.
Crude oil prices made yet another new high yesterday, touching $93.74 (Oct. contract chart) before falling back to close at $91.20. That high was in this week's reversal zone, and prices are falling some more today. A correction may now be underway, but will it be a steep correction to the final bottom of an old medium-term cycle that started with the $64.58 low way back on May 4? Or will it be a modest sub-cycle correction in a new medium-term cycle that started with the low of $77.59 on Aug. 24? In the older cycle labeling, any correction would be steep and could last for 2-5 weeks with a low down to $83 or lower. A correction in a newer cycle would probably last just 3-8 days and only get down to $87 - $88. Let's stay on the sidelines and wait to see where prices go into Friday. We may be looking for a spot to buy.