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The stock market has been grappling with ongoing concerns about economic growth, corporate earnings, and tariffs. Despite these challenges, the S&P 500 rose by 0.5% and the Nasdaq Composite by 0.2%, breaking a four-week losing streak. The equal-weighted S&P 500 also saw a 0.7% increase from the previous Friday. However, worries persist, fueled by several factors, including the Federal Open Market Committee (FOMC) meeting.
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The FOMC held rates steady, keeping the federal funds target range at 4.25-4.50%.
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Fed Governor Waller dissented, not on the rate decision, but on the pace of balance sheet reduction.
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The committee decided to slow the monthly runoff of Treasury securities from $25 billion to $5 billion starting April 1, while maintaining the mortgage-backed securities runoff at $35 billion.
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The Fed acknowledged rising economic uncertainty and remains focused on its dual mandate.
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The Summary of Economic Projections (SEP) shows a lowered 2025 GDP growth forecast from 2.1% to 1.7% and an increased PCE inflation projection from 2.5% to 2.7%.
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The median estimate for the fed funds rate remains at 3.9%, indicating expectations for two rate cuts this year.
Fed Chairman Powell mentioned that it is challenging to assess the inflation impact from tariffs, suggesting that tariffs’ inflationary pressures could be temporary. The market remains vigilant about potential reciprocal tariffs being announced on April 2.
Treasuries ended the week with solid gains. The 10-year yield decreased by six basis points to 4.25%, and the 2-year yield fell by seven basis points to 3.95%.
Fairholme Fund has made the following transactions:
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Reduce in JOE by 1.24%
Boeing (NYSE:BA) saw a significant boost, surging 5.2% after securing a major contract to build the U.S. Air Force’s Next Generation Air Dominance fighter jet. This contract, valued at over $20 billion, marks a pivotal win for Boeing, as it aims to replace Lockheed Martin’s (NYSE:LMT) F-22 Raptor. The news of Boeing’s contract win had a contrasting effect on Lockheed Martin, which fell by 5.1%.
Micron Technology (NASDAQ:MU) led a decline in chip stocks, dropping 8% after reporting pricing issues that affected its gross margin, despite beating quarterly estimates. This downturn spread across the semiconductor sector, impacting GlobalFoundries (GFS), Lattice Semiconductor (LSCC), and Analog Devices (ADI), each falling about 2%. Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (AMD) also saw declines of nearly 2%.
