Stock Market Update Wednesday March 19, 2025

Stock Market Update Wednesday, March 19, 2025 The Federal Reserve maintained its policy stance, keeping interest rates unchanged while reaffirming its outlook for two additional rate cuts later this year. With no unexpected shifts in monetary policy, equity markets responded favorably, rallying across major indices. The S&P 500 (SPX) advanced 1.1%, the Nasdaq 100 (QQQ) gained 1.2%, and the Russell 2000 (IWM) surged 1.6%. These moves effectively erased yesterday’s selloff, propelling the S&P 500 back to the upper boundary of its 100-point trading range for the week.

Away From Stocks: Treasuries experienced bull steepening, with the 2-year yield declining five basis points to 3.99% and the 30-year yield easing two basis points to 4.56%. Commodities saw mixed movement: WTI crude remained steady at $67 per barrel, while gold climbed to $3,046 per ounce, reflecting investor demand for safe-haven assets. Meanwhile, Bitcoin rallied toward $86,000, extending its recent bullish momentum, and the VIX closed below 20 for the first time this month, signaling a decline in market volatility.

As expected, the Federal Open Market Committee (FOMC) held the federal funds rate unchanged. However, it revised its GDP growth projections downward, cutting 2024 estimates from 2.1% to 1.7% and 2026 forecasts from 2.0% to 1.8%. Inflation expectations ticked higher. The FOMC also moderated the pace of Quantitative Tightening (QT) to $25 billion per month, while maintaining the $35 billion monthly cap on mortgage-backed securities (MBS) runoff.

After the announcement market reaction was pretty muted, with long-term bond yields edging lower. A sharper decline in the 2-year Treasury yield led to a notable steepening of the yield curve. The FOMC’s dot plot continues to indicate two rate cuts in 2024 and two more in 2025, though policymakers acknowledged greater economic uncertainty.

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