Fed Pauses, Market Hesitates
Rate forecast divides the Fed while investors juggle clarity, conflict, and Coinbase optimism
I. Headlines & Catalysts
The Fed kept interest rates steady at 4.25%-4.5% ,exactly what markets priced in. But the real tension came from the updated dot plot: while the average forecast suggests two cuts in 2025, seven Fed members see no cuts at all. That divergence, plus revised projections for higher inflation and slower growth, created a brief bounce... then a reality check.
The market rose briefly on the confirmation, but quickly pulled back as the broader picture came back into focus.
Geopolitics still cloud the horizon: Trump refused to clarify if the U.S. will get involved in the Israel-Iran conflict, keeping investors on edge. Meanwhile, gold slipped as traders digested the Fed outcome, even as safe-haven interest remains elevated.
And in the crypto corner: Coinbase ($COIN) soared, leading the S&P 500 after the Senate passed the GENIUS stablecoin framework, boosting confidence in regulation and Coinbase’s launch of a new B2B payments product using USDC.
II. Sector Performance Snapshot
Winners:
Financials (+0.37%)
Technology (+0.29%)
Real Estate (+0.26%)
Laggards:
Energy (-0.73%)
Communication Services (-0.62%)
Basic Materials (-0.31%)
A classic risk-on/reality-off session: Financials rallied post-Fed, while Energy and Communication stocks faced a double whammy from global tension and macro caution.
Financials partied while Energy spilled its drink.
III. Technical Breadth & Sentiment Check
Advancers vs Decliners: Nasdaq breadth remains weak, with A/D lines below short-term moving averages.
New Highs–Lows: Only 1 new high day from 3, a yellow flag on follow-through strength.
VIX at 20.14: Not fearful, but not relaxed either, a yellow signal.
McClellan Oscillator: Negative at -33.23
% Stocks above 200SMA: Only 34.57% — yellow.
Put/Call Ratio: 0.97, neutral sentiment, but might reaching cautions levels soon.
The market might look steady on the surface, but underneath, it's still showing signs of weakness.
IV. Earnings & Corporate News
Coinbase ($COIN) surged after stablecoin regulation news and launch of Coinbase Payments for businesses accepting USDC.
No other major earnings surprises hit headlines yesterday.
V. Economic Calendar Highlights
Wednesday: Fed kept rates steady.
VI. Interpretation & Outlook
Markets got what they expected from the Fed, but not what they wanted.
The committee is clearly divided, inflation remains sticky, and geopolitical risks are far from resolved. While some sectors are climbing on clarity, breadth and sentiment suggest caution still dominates.
Until markets see a decisive improvement in economic data or resolution in conflict zones, this feels like a “wait and watch” environment.
What to trade:
This environment may suit volatility plays and short-term trades, but it doesn't align with my usual approach. I'm not tempted by isolated catalysts in stocks like $OSCR, $SOFI or $COIN as it's hard to read where the smart money is flowing. I'd rather wait for the tide to turn than chase scattered waves.
Until the market shows more commitment, I’m staying on the sidelines.