Minutes of the Federal Reserve Meeting Released: Threat of Interest Rate Cuts Looms over the Fed

The Most Important Points in the US Federal Reserve Statement

The current peak interest rate is 5.5%.

Members need more evidence of inflation falling before they start cutting interest rates.

The Fed is aware of the risks of inflation rebounding.

In the second half of 2024, Fed Chairman Jerome Powell will issue a review of the next 5 years.

Only two Fed members expressed concerns about keeping interest rates high, but the majority focused on the risks of cutting rates too early.

Fed funds futures price the first rate cut in June.

Market Movement After the Release of the Fed Minutes

The cautious tone of the US Federal Reserve meeting minutes led to the strengthening of the US dollar index, which stabilized near the 104 level, specifically at 103.910 against a basket of foreign currencies now.

Spot gold contracts are down 0.16% currently at $2036.4 per ounce, while gold futures contracts are holding steady at $2025.84 per ounce currently.

On the other hand, the major US market indices fell by varying percentages, with the Nasdaq index down 0.63% to 15,530, the Dow Jones index down 0.14%, and the S&P 500 index down 0.19%.

Bitcoin is currently trading down 1.18% at $50,894 per token. Ethereum is down to $2906.77 per coin currently, down 0.8%.

Nvidia’s Stock Turns Losses into Gains of Over 7% in Minutes

Nvidia’s results for the fourth quarter of 2023 were released minutes ago, and the stock closed trading before the results down about 3% to $674.72.

The Nasdaq index fell 600 points today in a negative signal after the release of the US Federal Reserve meeting minutes, in which the Fed confirmed its commitment not to cut interest rates early, and the market is pricing in the first rate cut to take place at the June meeting.

Despite the decline, some of the most traded bets hours before the release were trades linked to Nvidia’s stock rising to $1300, about twice the current stock price. Other widely traded bets include calls linked to the stock rising to $800 or $700, according to data from Cboe Global Markets.

It’s a sign of the excitement around artificial intelligence as traders use options to bet on the company’s huge volatility. Call options give the right to buy shares at a specific price and on a specific date. Of course, options can also be used to hedge other parts of an investor’s portfolio.

Nvidia’s Earnings Results

The company lost more than 7% in minutes after the earnings data was released, but it managed to turn positive in minutes and is now up to $718 per share, up 6%.

Nvidia’s earnings were released and were positive, with the company posting earnings of $22.1 billion in the fourth quarter of 2023, while Dow Jones analysts had forecast only $20.55 billion.

Nvidia’s earnings per share also beat expectations, coming in at $5.16 per share, while analysts had expected only $4.61 per share.

Gold Rises Supported by Dollar Weakness and Middle East Tensions

Gold prices rose on Thursday, supported by a weaker dollar and rising tensions in the Middle East, as investors await more US economic data that could provide clues about the Federal Reserve’s next steps on interest rates.

The dollar index continued its losses for the fourth day in a row, making the dollar-denominated yellow metal more attractive to overseas buyers.

Israel intensified its shelling of the city of Rafah in the southern Gaza Strip, killing more than ten members of one family in an airstrike, while the health ministry in the devastated Palestinian territory said 29,313 people have been killed in the war so far.

Among other precious metals, platinum rose 0.3 percent in spot trading to $885.30 an ounce, palladium rose 0.6 percent to $955.63, and silver rose 0.1 percent to $22.89 an ounce.

Oil Holds on to Previous Session’s Gains Amid Supply Shortage Signals

Oil prices rose slightly on Thursday, holding on to gains from the previous session that came amid supply shortage signals. US West Texas Intermediate crude futures rose 17 cents to $78.08 a barrel for the nearest delivery month.

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Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs

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