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S&P 500, gold near all-time highs post-FOMC as US rates, dollar sink

After the FOMC signals rate cuts are likely for 2024, the S&P 500 and gold rally near all-time highs, reflecting market optimism. This dovish outlook prompts a weakened USD, as traders anticipate a softer monetary stance.
Source: Bloomberg
Picture of Frank Kaberna
Frank Kaberna
Director of Strategy, Chicago

Data current as of 3/20/2024

Key points

  • S&P 500 hits all-time above $5,200: (1:03)
  • Gold nears all-time high above $2,180: (1:40)
  • Fed holds rates unchanged, signals rate cuts are coming: (2:21)
  • Fed consensus: 3 rate cuts in 2024: (4:35)
  • US dollar weakens on rate cut news: (6:02)

S&P 500 hits all-time above $5,200

The S&P 500 Index soared to new heights, surpassing the $5,200 mark for the first time following the Federal Open Market Committee's (FOMC) decision to maintain current interest rates. This milestone highlights the bullish sentiment pervading the US stock market, as investors responded positively to indications that multiple rate cuts are still on the table for 2024.

Gold nears all-time high above $2,180

In the wake of the FOMC hinting at future rate cuts, gold's value surged, nearing its all-time high above $2,180. The precious metal reasserted its status as a safe-haven asset, with investors flocking to gold amid expectations of a more accommodative monetary policy. This rally underscores gold's appeal as yields on interest-bearing assets like Treasuries lower.

Fed holds rates unchanged, signals rate cuts are coming

During its recent meeting, the Federal Reserve chose to keep interest rates unchanged, with Chair Jerome Powell stating, "if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.” Powell's hint at the likelihood of easing policy signals a cautious approach, but still more firm than markets expected. Recent data revealing strong inflation caused some worry that the Fed would refrain from lowering interest rates this year.

Fed consensus: 3 rate cuts in 2024

The Federal Reserve's revised dot plot revealed an expectation for 75 basis points in rate cuts throughout 2024, indicating a collective anticipation of a more dovish monetary stance. This consensus among Fed officials is similar to their December dot plot, confirming that recent data has not deterred their strategy of navigating towards 2% inflation.

US dollar weakens on rate cut news

Following the Federal Reserve's dovish stance, the US dollar experienced a downturn against major currency pairs, with EUR/USD climbing back above the 1.0900 threshold. This weakening is illustrative of the immediate impact that monetary policy signals can have on currency valuations, affecting international trade dynamics and forex trading strategies. The dollar's movement in response to Fed decisions highlights the intricate interplay between central bank policies and global currency markets.

How to trade US dollar

  1. Open an account to get started, or practice on a demo account
  2. Choose your forex trading platform
  3. Open, monitor, and close positions on USD pairs

Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.

Reviewed by:
Glen Frybarger
Senior Content Strategist, Chicago

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