Fed Lowers Rates for Third Time in 2023, Hints at Another Cut in 2026
Market Performance: The S&P 500 is down 0.34%, while the Dow Jones is up 0.67%, and the Nasdaq 100 is nearly unchanged. The Federal Reserve approved a third interest rate cut of 25 basis points this year, despite inflation concerns, with expectations for only one more cut in 2026.
Employment and Earnings: The US Q3 employment cost index rose by 0.8%, slightly below expectations, indicating easing wage pressures. Q3 corporate earnings for S&P 500 companies showed strong performance, with 83% exceeding forecasts and earnings rising 14.6% year-over-year.
Interest Rates and Bonds: The 10-year T-note yield fell to 4.166%, supported by weaker employment data and lower inflation expectations. European government bond yields rose, with the German bund reaching an 8.75-month high, as the ECB signals a more optimistic economic outlook.
Stock Movements: Mobile grocery delivery stocks fell after Amazon expanded its delivery services, while cryptocurrency-related stocks also declined. Notable gainers included Photronics, which surged over 42% after strong earnings, and GE Vernova, which increased over 9% following a stock buyback announcement.
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Trump Criticizes Powell on Interest Rates, Links It to National Security – Claims Fed Policy Is Costing the US 'Hundreds of Billions of Dollars Annually'
Federal Reserve's Decision: The Federal Reserve has decided to keep the key borrowing rate unchanged, maintaining it within the 3.5% to 3.75% range, aligning with market expectations despite previous rate cuts totaling 75 basis points in 2025.
Economic Activity: The FOMC noted that economic activity is expanding at a solid pace, although job gains remain low and inflation is somewhat elevated, indicating a mixed economic outlook.
Trump's Criticism: President Donald Trump criticized Federal Reserve Chair Jerome Powell for maintaining high interest rates, arguing that it is detrimental to U.S. national security and unnecessary given the current economic conditions.
Potential Government Shutdown: The Fed's decision may be followed by significant macroeconomic and political developments, including a potential U.S. government shutdown and Trump's upcoming nomination for the next Fed Chair position.
Gold, Silver, or Stocks? The Return Discrepancy for 2026 is Astonishing
Investment Returns: An investment of $10,000 in gold and silver a year ago would now be worth $20,000 and $38,300, respectively, while similar investments in major stock indices would yield lower returns.
Gold and Silver Performance: Gold prices have surged over 3% recently, reaching a new high of $5,595 per troy ounce, while silver prices also rose, touching $120.44 per troy ounce.
Market Drivers: Analysts attribute the rising gold prices to geopolitical tensions and a weakening dollar, alongside increased investor demand for safe-haven assets.
Future Projections: Experts predict that gold could reach $6,000 per troy ounce by 2026, driven by ongoing geopolitical issues and structural supply deficits in precious metals.