The December Fed meeting concluded on December 10, with the central bank issuing its third straight quarter-point rate cut.

The central bank also released its Summary of Economic Projections, or dot plot, which remained more or less the same from September, but gave more optimistic outlooks for the economy and inflation.

"Powell got out his three wood and hit it right done the middle," says Ryan Detrick, chief market strategist at Carson Group. "The market got the cut it wanted and although a January cut isn't the base case, by no means did they put cold water on that potential move. Then the cherry on top was a stronger forecasted economy next year, never something we'd consider a bad thing."

The Kiplinger team is reported live on the December Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy. Scroll for all the updates.

Best Stocks to Buy for Fed Rate Cuts | Falling Interest Rates: What They Mean for Homeowners, Savers and Investors | What's Next for the Fed — as an Institution?

Fed meeting schedule for 2026

The next Fed meeting, which runs from December 9 to December 10, marks the final gathering of 2025. Looking ahead to 2026, the Federal Open Market Committee will hold its first meeting of the new year on January 27 to 28.

"The committee meets eight times a year, or about once every six weeks," writes Kiplinger contributor Dan Burrows in his feature, "When Is the Next Fed Meeting?".

The Federal Open Market Committee "is required to meet at least four times a year and may convene additional meetings if necessary," Burrows adds, noting that "the convention of meeting eight times per year dates back to the market stresses of 1981."

Fed meetings last two days and wrap up with the release of a policy decision at 2 pm Eastern Standard Time. This is typically followed by the Fed chair's press conference at 2:30 pm.

Here is the full Fed meeting schedule for 2026:

• January 27 to 28
• March 17 to 18
• April 28 to 29
• June 16 to 17
• July 28 to 29
• September 15 to 16
• October 27 to 28
• December 8 to 9

- Karee Venema

Who gets to vote at the December Fed meeting?

The Federal Open Market Committee (FOMC) has 12 total members, eight permanent and four who rotate each year.

The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed.

Four regional Fed presidents are rotated in each calendar year.

The 2025 FOMC voting committee consists of:

• Fed Chair Jerome Powell
• Vice Chair Philip Jefferson
• Fed Governor Michael Barr
• Fed Governor Michelle Bowman
• Fed Governor Lisa Cook
• Fed Governor Stephen Miran
• Fed Governor Christopher Waller
• New York Fed President John Williams
• Boston Fed President Susan Collins
• Chicago Fed President Austan Goolsbee
• St. Louis Fed President Alberto Musalem
• Kansas City Fed President Jeffrey Schmid

In 2026, the presidents from Cleveland, Philadelphia, Dallas and Minneapolis will rotate in as FOMC voting members, according to the Federal Reserve. Additionally, Jerome Powell's term as Fed chair is up in May.

- Karee Venema

How can you invest for lower interest rates?

With the Federal Reserve expected to cut rates at its final meeting of 2025, many investors may be wondering how they can prepare their portfolios.

One way is to seek out high-quality growth stocks, which tend to see outsize benefits from lower interest rates.

This happens for two reasons, says Kiplinger contributor Charles Lewis Sizemore, CFA. For one, lower rates make capital cheaper and "young, fast-growing companies often rely on external funding."

Additionally, lower interest rates boost the current value of future profits, which increases valuations for firms with long-term earnings potential.

Read more: How to Invest for Fall Rate Cuts by the Fed

Markets are optimistic about a rate cut

Equity index futures pointed to a higher open for Fed Week Monday morning, following through on solid gains for the first week of December. The S&P 500 closed higher for a fourth straight session and its ninth out of 10 on Friday.

"The stock market may have bounced back strongly from its November pullback," E*TRADE Managing Director Chris Larkin observes, "but a new up leg to its rally is still a work in progress."

According to Larkin, what the FOMC does and Federal Reserve Chair Jerome Powell say on Wednesday "will likely determine whether the S&P 500’s October record highs turn out to be genuine resistance level or just the latest notch on the bull market’s belt."

FedWatch shows a near-90% probability the FOMC will cut the target range for the federal funds rate by another 25 basis points, following similar moves in September and October. As Larkin notes, recent incoming economic data highlight both "ongoing labor-market softness and sticky inflation.

So lower interest rates at this meeting "might not be a slam dunk" despite market optimism. "As is often the case, though," Larkin concludes, "Chair Powell’s press conference could play a big role in shaping the market’s short-term response."

– David Dittman

The Fed's windshield is foggy

The three main U.S. equity indexes turned negative less than an hour into Monday's trading session as investors continue to process incoming data from the economic calendar.

The S&P 500 was down about 0.2% a little more than 50 minutes after the opening bell but remained within 0.5% of its October 28 record closing high of 6,890.89. The Dow Jones Industrial Average was off 0.3%, and the Nasdaq Composite was down 0.1%.

We should probably expect a little intraday up-and-down this week, which will still amount to not much compared to movement in expectations around what the Fed will do this week.

FedWatch has been all over the place amid unprecedented data-blindness due to a record-long government shutdown. Today, it shows a near 90% probability of a 25-basis-point rate cut.

As recently as November 19 markets were about 70% certain the FOMC would hold the target range for the federal funds rate at 3.75% to 4.00% after cutting at its September and October meetings.

“To my knowledge, it’s totally unprecedented,” Peterson Institute of International Economics Senior Fellow David Wilcox told Quartz.

Wilcox said the present situation is "off the charts" and compared the Fed to a person driving with a foggy windshield.

– David Dittman

For whom the Fed bids

As Bloomberg's Joe Weisenthal notes, nobody cares about the independence of the U.S. central bank amid lingering questions about what's next for the Fed as an institution during President Donald Trump's second run in the White House.

The White House has already openly discussed whether it would fire Fed Chair Jerome Powell as it lobbied for lower interest rates through most of 2025. And there's a pending Supreme Court case that will resolve Gov. Lisa Cook's future on the Fed's board.

"There's a ton of talk on Wall Street and in the media that Fed independence is at risk of going away," Weisenthal observes. "That is definitely a valid concern."

He cites Trump's public criticism of the FOMC and the fact that the president named the chair of his own Council of Economic Advisors to fill a recent vacancy on the board.

And Trump will soon name a successor to Powell: "One likely candidate is Kevin Hassett, and there is a fear that Hassett will be there to do Trump's bidding, rather than assiduously pursue the Fed's dual mandate."

At the same time: "There's not much evidence that this is a real concern in the market right now." Weisenthal quotes Standard Chartered macro strategist Steve Englander at length but the bottom line is right here:

"Questions have been raised about Kevin Hassett’s credibility with markets and within the FOMC," Englander writes, "but the questions are not showing up so far in inflation breakevens, which are close to post-2024 election lows."

As Englander explains, "If Hassett as Federal Reserve Board Chair is expected to compromise inflation outcomes, this is where we would expect to see these concerns most clearly."

– David Dittman

The first half of the first day of Fed Week

There's a split among the "bullish" sectors – communication services, financial stocks, industrials and technology stocks – in the first half of Monday's trading session. The first two are in the red, the other two are in the green.

And all three main U.S. equity indexes have stabilized with modest losses of 0.2% to 0.3%.

Action in the bond market is similarly stable, with the yield on the 2-year U.S. Treasury note up to 3.602% from 3.564% on Friday. The 10-year U.S. Treasury yield is up to 4.178% from 4.139%, the 30-year from 4.822% from 4.792%.

FedWatch shows the probability of a 25-basis-point rate cut has dipped from 89.9% to 87.6%.

What's moving markets while we're watching the Fed? Probably Netflix (NFLX), which faces a hostile challenge from Paramount Skydance (PSKY) as it tries to complete its next eyeball-catching expansion with the acquisition of Warner Bros. Discover (WBD).

NFLX, a leader among communication services stocks, is down more than 4% as of midday Monday. The stock recently split 10 for 1.

Tech stocks were up but off their highs after International Business Machines (IBM) announced an $11 billion deal to acquire data-infrastructure firm Confluent (CFLT), as markets continue to ask whether we're in an AI bubble.

– David Dittman

The Supreme Court and the Federal Reserve

The Supreme Court is hearing oral arguments today in a case many observers consider a preview of the upcoming matter of whether President Donald Trump can fire Fed Governor Lisa Cook.

The White House is asking the high court to overturn a precedent established in a 1935 case, Humphrey's Executor v. United States, that limits presidential authority to remove the heads of independent agencies.

As Reuters reports, during today's questioning Associate Justice Brett Kavanaugh asked Solicitor General D. John Sauer, arguing on behalf of President Trump, about implications for the U.S. central bank.

"How would you distinguish the Federal Reserve from agencies such as the Federal Trade Commission?" Justice Kavanaugh asked. The Supreme Court will hear arguments on Trump's attempt to fire Cook on January 21.

In May, the Court issued an opinion suggesting at least six justices would rule against the president. It did not explicitly overrule Humphrey's Executor, but it did allow him to fire two members of other federal agencies' boards.

And the Court offered a two-sentence summary on the question it will begin to answer next month.

"Finally," the six-member majority wrote in an unsigned opinion, "respondents Gwynne Wilcox and Cathy Harris contend that arguments in this case necessarily implicate the constitutionality of for-cause removal protections for members of the Federal Reserve's Board of Governors or other members of the Federal Open Market Committee.

"We disagree. The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States."

– David Dittman

Does Gen Z even care about the Fed?

In its most romantic guise it's the foundation of a whole new financial system where things like the next Fed meeting simply don't matter. In more prosaic terms what cryptocurrency is and how bitcoin works boil down to digital money.

At the same time, young people recognize what's happening here: crypto is growing and maturing. More evidence comes from an October 2025 YouGov survey surfaced by Marketwatch.com today.

According to YouGov (pdf), 26% of young men own cryptocurrency, and 28% own any crypto-based asset such as individual tokens and/or coins, crypto-based ETFs, or both. Meanwhile, 21% say they have a 401(k), Roth IRA or similar retirement fund. And 24% say they hold individual stocks.

This is consistent with similar findings from YouGov reported by Fortune in February: "Gen Z investors are four times more likely to own crypto than retirement accounts."

To be clear, these are the crypto trends we're watching in 2026.

– David Dittman

Certainty, uncertainty and the Fed

The three main U.S. equity indexes continued to head lower Monday afternoon amid rising volatility (as measured by the market's "fear index") and a lot of known unknowns.

"The uncertainty of the nature of the Fed cut expected this Wednesday has put the market in a wait-and-see mode," Louis Navellier of Navellier & Associates observes.

That 87.4% (and falling, if ever so slightly) probability is "clouded by the expectations that the cut will be highly contentious internally and whether the rhetoric will be hawkish enough to bring serious doubts about any further cuts until Chairman Powell is replaced in May."

Navellier notes as well that absence "of complete economic data due to the catch-up from the extended government shutdown also makes reaching conclusions difficult."

He says too that a developing "trend in interest rates is becoming more challenging," highlighting the move in the 2-year U.S. and the 10-year U.S. government yields to their highest levels in more than a month and since March, respectively.

"The VIX had dropped to 15.3 premarket, the lowest in three months," Navellier adds, "and has jumped back to 16.8 in an apparent caution over the upcoming Fed cut."

While the trend remains cautiously positive, he concludes, uncertainty will continue until after Wednesday's FOMC decision and commentary from the outgoing Fed chair.

– David Dittman

About the Fed's data deficit

Much is being made of the economic data deficit the longest government shutdown in the history of the United States has created for the Federal Reserve.

A lot of the ups and downs for expectations about what our central bankers will do with the federal funds rate have been fueled by the absence of information about jobs and inflation.

Now imagine a world where data about the holdings of the biggest investors, traders and speculators on the planet across the full spectrum of financial assets – including buy and sell transactions – is available in real time.

Among the crypto trends we're watching in 2026 is "integration and convergence": where "TradFi" and "DeFi" combine to make things more efficient for everyone.

OK, look, yes, we're not contemplating real-time Consumer Price Index (CPI) data (the dream is, of course, PCE…).

But at least some market participants were limited by the delay in commitment of traders reports from the Commodity Futures Trading Commission.

And the fast-growing and rapidly maturing crypto industry shows us how to solve problems like that, for the long term.

– David Dittman

Does the Fed need to think about deflation?

"This week will be all about the Federal Open Market Committee (FOMC) statement on Wednesday," Louis Navellier of Navellier & Associates says. Still, there are notable names on the earnings calendar, including Oracle (ORCL, +1.4%) and Broadcom (AVGO, +2.8%).

Navellier doesn't expect the FOMC to signal more cuts to interest rates in its post-meeting statement "no matter what their dot plot signals" because voting members remain "very uncomfortable with the delay in economic data from the federal government shutdown."

At the same time, the Fed must cut the target range for the federal funds rate two more times – in addition to a 25-basis-point move this week – "and move to a 'neutral' rate."

According to Navellier, "The inflation risk has fizzled, and due to falling home prices, excess rental properties, and falling crude oil prices, if anything, there is a potential deflation risk that the Fed must consider."

As of Monday's closing bell, FedWatch shows an 89.4% probability of a quarter-point rate cut at the conclusion of this week's FOMC meeting.

And we'll be there all the way through to the other side of Fed Chair Jerome Powell's press conference.

– David Dittman

Stocks start Fed Week on a negative note

Stocks trended lower throughout Monday's session as caution set in ahead of the December Fed meeting. The central bank is widely expected to announce its third straight quarter-point rate cut Wednesday afternoon. However, uncertainty remains about what's in store for interest rates and the economy in 2026.

"This week's FOMC decision could set the tone for the remainder of 2025 and beyond, shaping expectations for monetary policy, risk appetite, and market leadership," says Mark Hackett, chief market strategist at Nationwide.

Another rate cut "would reinforce the narrative of easing financial conditions," while "any deviation from the expected path, or hawkish commentary, could recalibrate positioning and volatility as investors reassess the Fed's resolve," Hackett adds.

At today's close, the blue-chip Dow Jones Industrial Average fell 0.5% to 47,739, the broader S&P 500 slipped 0.4% to 6,846, and the tech-heavy Nasdaq Composite shed 0.1% to 23,545.

Read more: Stocks Slip to Start Fed Week: Stock Market Today

Four rate cuts in the next 12 months?

Scott Helfstein, head of investment strategy at Global X, says it's not out of the realm of possibility for the Federal Reserve to cut rates up to four times over the next 12 months.

"Simply put, real rates, or Fed funds minus inflation, is too high," explains Helfstein. "That will ultimately drive the Fed in the coming meetings. Powell noted that inflation ex-tariffs was much closer to target than the headline number and risks to the employment mandate are rising."

As such, the Fed is expected to cut rates this week and Chair Powell will likely warn that future rate cuts are no guarantee. "This really should not be surprising nor trigger a market move, but it might," says the strategist. "They are going to be data dependent, and as of now, data favors lower rates."

The bottom line, he points out, is that the Fed appears to be on a slow, sustained path toward lower rates. This and strong earnings will likely keep the wind in the stock market's sail.

Looking ahead to 2026, Helfstein believes tech stocks will continue to perform well, but a broader rotation will benefit infrastructure and industrial stocks, as well as utilities.

- Karee Venema

Stock futures signal a lower start on Tuesday

Stock futures are trading cautiously lower ahead of Tuesday's open. At last check, futures on the Dow Jones Industrial Average and S&P 500 are down 0.1%, while the Nasdaq-100 is off 0.2%.

As for single stocks, Nvidia (NVDA) is up 0.3% in electronic trading after President Trump said the tech giant could sell its H200 AI chips to China in exchange for the U.S. receiving a 25% cut of the sales.

And alternative asset management firm Ares Management (ARES) is nearly 8% higher on news it will replace snack maker Kellanova (K), which Mars is acquiring, in the S&P 500, effective ahead of the December 11 open.

- Karee Venema

What is the greater risk to the economy: inflation or the labor market?

The Federal Reserve has spent the past several months trying to balance sticky inflation with signs of a major slowdown in the labor market, says Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.

This isn't anything new, he adds. Remember, the Fed has a dual mandate, as established by a 1977 amendment to the Federal Reserve Act, of maximum employment and stable prices.

But more recently, it's been an even tougher challenge.

Why? For one, says Schutte, there's less information available. Even "before the government shutdown, conflicting indicators of persistent inflation posed by tariffs versus a softening labor market and robust economic growth had already muddied the long-term economic outlook," he notes.

Additionally, economic divides have widened in recent years due to higher interest rates. Schutte says growth in areas that are sensitive to interest rates, including manufacturing and housing, has slowed, while higher-income investors have benefited.

This "K-shaped" economy makes "the Fed's job harder, as a policy that boosts one group may inadvertently drag down the other," Schutte explains. So, while the central bank is expected to cut rates by a quarter-percentage point this week, he believes there will likely be dissent among committee members.

- Karee Venema

Related: Kiplinger Jobs Outlook: A Good September Report Hides Ongoing Weakness

Who appointed Jerome Powell as Fed chair?

Jerome Powell assumed the role of Fed chair on February 5, 2018, after being nominated by then-President Donald Trump, who was serving his first term in the White House.

Powell's initial four-year stint as head of the Federal Reserve ended in 2022, but he was reappointed for a second four-year term on May 23, 2022, after being nominated by then-President Joe Biden.

Powell initially joined the Fed's Board of Governors in 2012 after he was nominated by then-President Barack Obama.

While Powell's second term as Fed chair will expire in May 2026, he can remain on the Fed's board until January 2028.

- Karee Venema

Job openings were unchanged in October

The Fed got its last labor market update ahead of tomorrow's policy announcement with this morning's release of the Job Openings and Labor Turnover Survey (JOLTS).

According to the Bureau of Labor Statistics, there were 7.67 million job openings in October, a tick higher than the 7.658 million job openings in September.

Total separations, which include quits, layoffs and discharges, slipped to 5.05 million from 5.264 million, as did hires (to 5.149 million from 5.367 million).

"The labor market is holding on, though it remains fairly unfriendly to job seekers," says Elizabeth Renter, senior economist at NerdWallet. "When employers aren't hiring, it makes it difficult for those without work, but also those who could otherwise move on from their current jobs to better opportunities."

The stagnation in both hiring and quits isn't great for the economy, she says, "but it's not bad enough to cause alarm. A more dramatic pullback in hiring could push the unemployment rate up, as could significant layoffs, but we're not seeing either of those in the data, yet."

- Karee Venema

Time to review your portfolio as the Fed lowers rates

No matter how you feel about the Federal Reserve's rate-cutting campaign, it's important to prepare your portfolio for lower interest rates, says Anne Kates Smith, executive editor of Kiplinger Personal Finance magazine.

"The good news for investors is that lower interest rates are largely positive for stocks — even in the second year of a rate-cutting cycle," she writes. Real estate, financials, tech and health care are among the sectors that tend to perform well in the second year of rate cuts, while mid- and small-cap stocks offer attractive options as well.

- Karee Venema

Read more: How to Position Your Portfolio for Lower Interest Rates

Will the Fed cut rates in December?

The Federal Reserve is widely expected to cut interest rates at its December 9-10 meeting as inflation holds steady and downside risks to the labor market remain.

As of December 9, CME Group FedWatch showed futures traders are pricing in an 89.6% probability the FOMC will lower the federal funds rate by 25 basis points (0.25%) to a range of 3.50% to 3.75%. This would mark its lowest level since September 2022.

- Karee Venema

Should you open a CD ahead of the Fed announcement?

Demand for certificates of deposit (CDs) has been on the rise in recent years, thanks to elevated interest rates, which weighed on stock market returns and had investors seeking out less-risky options.

With the Fed expected to cut rates again tomorrow, now could be an ideal time to lock in attractive yields on CDs.

The difference in yields on short-term and long-term CDs is minimal at the moment, so if you do decide to open a certificate of deposit, your choice between the two could rest with how long you're able to lock up your cash.

Remember that when putting your money into certificates of deposit, you're unable to access it until the CD matures. If you do withdraw funds ahead of time, you'll be charged a fee.

Read more: Should You Get a Long-Term or Short-Term CD Before the Next Fed Meeting?

The policy path for 2026 remains uncertain, says Raymond James CIO

The Fed will wrap up its final meeting of 2025 tomorrow afternoon and Wall Street is widely expecting the central bank to cut rates for a third straight time.

But just "beneath this near certainty lies an unusual public split within the Federal Open Market Committee," says Larry Adam, chief investment officer at Raymond James. "Recent dissents highlight the challenge of balancing a cooling job market against stubborn inflation – casting fresh uncertainty over the policy path for 2026."

And the end of Jerome Powell's term as Fed chair in May adds intrigue to the rate-cut debate. National Economic Council director Kevin Hassett, who is the frontrunner to replace Powell, said during a Wall Street Journal CEO Council event on Tuesday that "there's plenty of room" to cut rates moving forward "if the data suggests we could do it."

For now, Wall Street will have to rely on the FOMC's Summary of Economic Projections, or "dot plot", to see where committee members expect the federal funds rate to be at the end of 2026.

In September, the dot plot revealed median expectations for just one quarter-point rate cut in 2026, following three in 2025. "We don't anticipate major changes to that median view, but the growing gap between market pricing and the Fed's expected rate path is a risk worth watching," says Adam.

- Karee Venema

How well do you know the Fed?

Fed meetings have become key events on Wall Street after inflation hit a pandemic-induced 40-year peak in 2022 – which forced the central bank into an aggressive rate-hiking campaign that lifted the federal funds rate to its highest level in more than two decades.

But how well do you know the Fed?

With the next Fed announcement on deck, we decided to test your basic knowledge of the Federal Reserve and how its actions impact you and your money.

Quiz: How Well Do You Know the Fed?

A reality check on fixed income and Fed rate cuts

"What does the Federal Reserve's rate-reduction initiative mean in the short run for your fixed-income holdings?," asks Jeffrey Kosnett, editor of Kiplinger Investing for Income.

If past is precedent, some short-term upheaval. After the Fed cut rates by one full percentage point in late 2024, "the year ended with bond markets and fund returns in retreat," says Kosnett. And with sticky inflation and a weak dollar, "there is no sign of fading economic momentum to the degree that traditionally provokes big flows into Treasury bonds and forces those yields down."

Still, investors should hang tight, Kosnett advises, and seek out potential opportunities in places such as non-traditional bond funds and municipal bonds.

- Karee Venema

Read more: What Fed Rate Cuts Mean For Fixed-Income Investors

Another near certainty on Wednesday: Powell's purple tie

The odds of a December rate cut are high. It's also a near-certainty that Fed Chair Powell will be wearing a purple tie during Wednesday's press conference.

That's because Powell always wears a purple tie … and there's a reason for it.

During an early April Q&A session with journalists at the Society for Advancing Business Editing and Writing conference, Powell was asked about the significance of his purple ties.

"At the beginning, the only significance was that I like purple ties," Powell replied. At his next press conference, he said he went to reach for a red or blue tie and thought, "Maybe not … so I wind up wearing purple."

He said now it's become "a thing," and it supports the fact that the Fed "is strictly non-political" and "bipartisan," and purple is a good color for that.

"Plus, I like purple ties," Powell concluded.

- Karee Venema

Small caps outperformed on Tuesday

Stocks were choppy Tuesday, with market participants in wait-and-see mode ahead of tomorrow's policy announcement from the Federal Reserve. With the central bank widely expected to cut interest rates again, rate-sensitive small caps outperformed and the Russell 2000 hit a new intraday high.

The small-cap benchmark fell short of a new record close, though, gaining 0.2% to 2,526. The tech-heavy Nasdaq Composite (+0.1% at 23,576) also finished in positive territory, while the broader S&P 500 (-0.09% at 6,840) and the blue-chip Dow Jones Industrial Average (-0.4% at 47,560) ended in the red.

Read more: JPMorgan's Drop Drags on the Dow: Stock Market Today

What time will the Fed statement be released and what changes are expected?

The Federal Open Market Committee will release its updated policy statement at 2 pm Eastern Standard Time today, December 10.

"Available indicators suggest that economic activity has been expanding at a moderate pace, the committee wrote in its October statement. "Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated."

As such, the FOMC voted to lower the federal funds rate by a quarter-percentage point to a range of 3.75% to 4.00%.

This time around, Goldman Sachs economists say the statement "will likely borrow the 'extent and timing of additional adjustments' language used in December 2024 under quite similar circumstances to convey that the bar for any further cuts will be somewhat higher."

They also expect more dissents than at the October Fed meeting, where Fed Governor Stephen Miran supported a half-percentage point cut and Kansas City Fed President Jeffrey Schmid supported a pause.

The economists say one other committee member could join Schmid in voting to keep rates unchanged at this meeting and believe that up to five central bankers could issue soft dissents on the Fed's monetary policy choices for this year.

What's a soft dissent? The Fed's December meetings allow all committee members to " tell you what they thought was appropriate policy for the year that just ended," explains Nick Timiraos of The Wall Street Journal. "In other words, do they agree with what just happened? Most years, this is a formality — everyone writes down whatever rate the committee settled on. But when it isn't, you get something fascinating: soft dissents. Officials who didn't vote against the decision (or weren't even voting members) quietly register that they would have done something different. "

"Dissents might actually be somewhat helpful to Powell in getting across that the bar for another rate cut will be higher," Goldman Sachs economists write.

- Karee Venema

Stock futures signal a quiet open on Fed Day

Stock futures are little changed Wednesday as Wall Street awaits this afternoon's policy announcement from the Federal Reserve. At last check, futures on the Dow Jones Industrial Average and S&P 500 were up slightly, while the Nasdaq-100 was signaling a lower open.

There is some notable price action among individual stocks, though. Braze (BRZE) is 16% higher in pre-market trading after the consumer engagement platform reported a fiscal third-quarter revenue beat. And Cracker Barrel Old Country Store (CBRL) is down nearly 4% after the restaurant chain's fiscal first-quarter top-line miss.

- Karee Venema

Trump to conduct final interviews with potential Powell replacements

President Donald Trump said he will begin the final interviews with the top candidates to replace Jerome Powell as Fed chair.

While Kevin Hassett, director of the National Economic Council, is widely believed to be the frontrunner, media reports suggest Trump and his team will meet today with Kevin Warsh, who served as a Fed governor from 2006 through 2011.

On Tuesday, Trump told POLITICO that he would only choose someone to replace Powell who is committed to cutting interest rates.

- Karee Venema

When does Jerome Powell's term as Fed chair end?

President Trump has not been subtle in his dislike of Fed Chair Powell. But the question of whether or not Trump can fire Powell has quieted down in recent months, given that the Fed chair's term is up on May 15, 2026.

Christian Hoffmann, head of fixed income at Thornburg Investment Management, says there likely won't be any surprises at the December meeting, but notes that "the biggest thing happening in the background is the question of who will lead the Fed."

He expects Fed Chair Powell to become "a lame duck fairly quickly," with whoever is chosen to replace him to become somewhat of a "shadow Fed chair ... offering opinions or taking potshots from the sidelines."

For what it's worth, Powell's term as a member of the Board of Governors of the Federal Reserve ends on January 31, 2028.

- Karee Venema

Where can I watch Fed Chair Powell's press conference?

Fed Chair Jerome Powell's press conference will begin at 2:30 pm Eastern Standard Time this afternoon.

The presser can be viewed on the Federal Reserve's website or on the Fed's YouTube channel.

Labor costs rise at a slower-than-expected pace in Q3

The Federal Reserve was dealt a small inflation win this morning.

Ahead of the open, the Bureau of Labor Statistics said the Employment Cost Index (ECI), which measures labor costs, rose 0.8% from Q2 to Q3. The shutdown-delayed data came in below economists' estimate for a 0.9% increase.

Year over year, the ECI was up 3.5%.

The report shows that "the labor market is not a source of excess inflationary pressure at present," says Wells Fargo Senior Economist Sarah House. But the data "offered additional evidence that the gradual softening in the labor market is translating to slower compensation growth."

- Karee Venema

The December rate cut will be a hawkish one, says SWBC CIO

Chris Brigati, chief investment officer at SWBC, believes today's rate cut will be a hawkish one.

"The Fed is divided on how to proceed with rate cuts in 2026 given the delicate balance between job market weakness and still elevated inflation," says Brigati. "There is also uncertainty about the new Fed chair, and that may also add to the central bank's reluctance to make any major rate moves in the months leading up to Chair Powell's term ending."

As such, the central bank is unlikely to signal any additional rate cuts for early 2026. And Brigati thinks the Fed will keep interest rates unchanged in the first half of 2026, even amid pressure from doves, including Powell's eventual successor.

"We remain concerned about a potential inflation resurgence," explains the CIO. "Price data has stayed stubbornly high, consumer spending — particularly among higher-income households — shows little sign of slowing, and a more accommodative Fed stance to counter labor market weakness could reignite demand and add inflationary pressure."

Investors need to "stay alert," Brigati advises, and continue to rebalance portfolios following this year's strong showing from tech stocks. He says investors shouldn't abandon these high-growth stocks; rather, they need to develop a strategy "to cushion against volatility and position for opportunity."

- Karee Venema

Where have all the Fed speakers been?

The Fed-speak has been nonexistent over the past week or so. That's by design. Since Saturday, November 29, and until Thursday, December 11, participants in the FOMC meeting have been bound by a Federal Reserve policy that limits the extent they can talk about the economy and interest rates.

These two-week "blackout periods" begin the second Saturday that falls 10 days before the next FOMC meeting and end the Thursday that follows the meeting. The Fed's blackout period was an unofficial practice that began in the 1980s. It was formalized in 2011 and reaffirmed in January 2025.

Fed-watchers see the policy as a measure against corruption and the potential for information leaks to distort markets. It also provides cover for open discussion during the Fed's most intense periods of policy-making.

Here is a schedule for all blackout periods through January 2027.

- David Dittman

Stocks are mixed ahead of FOMC announcement

With about 45 minutes to go until the latest policy announcement from the FOMC, the main indexes are mixed. The blue-chip Dow Jones Industrial Average is up 0.5% on strength from financial stocks American Express (AXP) and JPMorgan Chase (JPM).

The broader S&P 500 is 0.1% higher, while the Nasdaq Composite is down 0.2%.

Over in the bond market, the 2-year Treasury yield is off 2.7 basis points to 3.586%, while the 10-year Treasury yield is down 2.6 basis points at 4.16%. A basis point = 0.01%.

- Karee Venema

What savers should do after the latest Fed rate cut

As the Federal Reserve wraps up its final meeting of the year, it's a good time for savers to take stock of where their money sits and what adjustments might make sense heading into the new year.

"After the Fed issued rate cuts this year, APYs on savings accounts dropped. Adding to uncertainty for savers is the fact that there will be a new Fed chair next year when Jerome Powell's term ends in May. However, it isn't all doom and gloom. Some savings accounts still offer substantial gains, helping you reach your short-term savings goals," says Sean Jackson, personal finance writer at Kiplinger.

And Sean is right. A rate cut doesn't change APYs overnight. Many of the top online banks were still offering yields in the low-to-mid-4% range throughout 2025.

By late 2025, savings rates remained elevated compared to pre-hiking-cycle norms, though they had eased off their absolute peaks, signaling a gradual, not dramatic, cooling. For savers, that means there's still time to capitalize on relatively high returns before yields drift lower.

To brace for the uncertainty 2026 brings, read Smart Money Moves Savers Should Make in 2026.

- Carla Ayers

The Fed decision is in

As expected, the Federal Reserve lowered interest rates by a quarter-percentage point at its December meeting, bringing the federal funds rate to a range of 3.5% to 3.75%.

Three Fed officials dissented from the latest rate cut

There were three FOMC committee members who voted against today's rate cut. Fed Governor Stephen Miran supported lowering the federal funds rate by a half-percentage point, while Kansas City Fed President Jeffrey Schmid and Chicago Fed President Austan Goolsbee supported a pause.

These dissents are "feeding the narrative that the Fed could be on hold after this, if there is so much internal disagreement now," says Jim Patterson, managing editor of the Kiplinger Letter.

- Karee Venema

What changed in the December FOMC statement

Changes to the FOMC's latest policy statement include the following:

Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. (Previously read: Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments.)

In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. (Previously read: In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.)

The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis. (Previously read: The Committee decided to conclude the reduction of its aggregate securities holdings on December 1.)

- Karee Venema

What did the FOMC's Summary of Economic Projections show?

Federal Open Market Committee members left their projections for interest rates unchanged compared to September. According to the dot plot, the Fed is forecasting just one rate cut in 2026 and another in 2027.

The group expects real gross domestic product (GDP) to be slightly higher this year and next than it forecast in September, at 1.7% in 2025 and 2.3% in 2026. Meanwhile, inflation expectations drifted lower, too, with committee members now expecting PCE inflation to finish 2025 at 2.9% vs its previous estimate of 3.0% and end 2026 at 2.4%, down from 2.6% in September.

Expectations for the unemployment rate were unchanged at 4.5% for 2025 and 4.4% for 2026.

You can see the FOMC's full Summary of Economic Projections here.

- Karee Venema

Powell says the Fed will resume Treasury securities purchases

"In light of continued tightening in money market interest rates relative to our administered rates and other indicators of reserve market conditions, the committee judged that reserve balances have declined to ample levels," says Powell.

As such, the committee decided to initiate purchases of shorter-term Treasury securities, namely bills. The FOMC will begin with $40 billion in purchases in the first month and "may remain elevated for a few months."

- Karee Venema

SEP suggests only moderate rate cuts from here

In his opening statement, Fed Chair Jerome Powell reported that the Fed expects inflation to end the year at 2.9%, based on its preferred gage, and then ease to 2.4% at the end of 2026. He also said that the Fed now expects U.S. GDP growth of 2.3% next year, which is a bit stronger than the central bank had previously projected for 2026.

Powell noted that the labor market has weakened recently, with hiring likely down due to reduced immigration. He also shared his colleagues' average projection for where the Fed's benchmark interest rate is going, with a median estimate of 3.4% at the end of 2026 and 3.1% at the end of 2027.

Those are just estimates, not firm plans, but they suggest only modest additional interest rate cuts from the Fed's current range of 3.5%-3.75%.

- Jim Patterson

Powell agrees that the Fed is basically "on hold" for now

Asked in a follow-up question whether the Fed's modest projections of further rate cuts means that the central bank is "on hold" now, Powell basically said yes.

He indicated that the Fed's benchmark rate is now likely somewhere close to the "neutral" level that neither stimulates the economy nor restrains it to lower inflation.

No one knows precisely where that theoretical neutral point is, but the fact that Powell believes that the Fed has gotten fairly close to it certainly indicates that he won't be in a hurry to extend the string of cuts the Fed has made in recent months.

- Jim Patterson

Market participants aren't too shaken by Powell's rate-cut outlook

There have been several times in recent memory when Chair Powell's cautious take on future rate cuts has sparked a stock market selloff, but we're not seeing that so far today.

At last check, the Dow Jones Industrial Average is up 0.8% and the S&P 500 is 0.4% higher. The Nasdaq Composite is hovering around the flatline.

- Karee Venema

While there were more dissents than usual, Powell says all members agree that inflation is too high

Asked about the elevated level of dissenting members of the Federal Open Market Committee who did not support today's quarter-point rate cut, Powell emphasized that everyone on the FOMC agrees that inflation is still too high, and that there are also risks to economic growth right now.

Addressing those two problems puts the Fed in a bind in deciding whether to cut rates to combat inflation, or lower them to boost the economy and hiring.

It sounds from Powell's remarks on the Fed's deliberations this month that today's quarter-point cut was an attempt to balance those competing concerns.

"You can't do two things at once," he noted. All of that certainly fits with the signals that the Fed will be waiting for a bit now before cutting rates again in the new year.

- Jim Patterson

The bond market sees the federal funds rate as closer to neutral, says GammaRoad Capital Partners CIO

The bond market isn't making a major move in reaction to today's Fed decision. At last check, the 2-year Treasury yield was down 5 basis points at 3.563% and the 10-year Treasury yield was 2 basis points lower at 4.166%.

"Treasury futures' muted initial reaction to today's rate cut at both the short and the long end suggests that the bond market now views policy as much closer to the proper neutral rate," says Jordan Rizzuto, CIO at GammaRoad Capital Partners. "This is further evidenced by the tightening of the spread between the two-year yield and the policy rate. Since the Fed's previous rate cut, we have seen long yields steadily rising, and we expect that any dovish guidance in the press conference will renew this recent upward pressure on long rates, as further cuts could be interpreted by bond traders as excessive."

- Karee Venema

The labor market remains a concern for Fed officials

"The labor market has continued to cool gradually ... maybe just a touch more gradually than we thought" in October, Powell said, in explaining why the Fed opted to cut rates again today, when he had suggested at the previous meeting that it might stand pat in December due to a lack of economic data during the government shutdown.

"It doesn't feel like a hot economy" where strong job creation could lead to renewed inflation pressures, he said.

He is not sounding any alarms about the job market, but it does appear that there is a note of concern about hiring among Fed officials.

- Jim Patterson

Chair Powell believes the inflationary impact from tariffs could peak in Q1

Powell expects the inflationary impact of new tariffs to peak in the first quarter of 2026, barring new tariff announcements.

"It takes some months ... quite a while for an individual tariff to take effect," the Fed chair said.

If the FOMC is right about that, then inflation from goods should ease later in the new year, and help lower the overall inflation rate. He noted earlier in his remarks that services costs have been cooling, but rises in goods linked to Washington's new tariff regime have kept the headline inflation number uncomfortably high.

Of course, there is no guarantee that the White House won't roll out additional duties on imported goods and scramble that rosy scenario.

- Jim Patterson

Powell says the Fed is committed to 2% inflation

"We're committed to 2% inflation and we'll deliver 2% inflation," Powell promised, when asked why the Fed is cutting interest rates when inflation is still above its 2% target. "If you get away from tariffs, inflation is in the low 2s," he estimated, and he noted that the Fed can't influence U.S. trade policy.

If the price bump from tariffs turns out to be a one-time issue, as the Fed expects, then Powell said he is confident that overall inflation will get back close to 2%, from its current level near 3%.

- Jim Patterson

Why is Powell worried about job growth?

Asked about concerns on job growth, Powell explains "it's very difficult to estimate job growth in real time," and recently there's been "an overcount," as indicated by revisions on job reports.

Based on recent numbers and revisions, he says, we could be in a place of negative job creation, and in a world where job creation is negative, the chair says, "we have to watch that very carefully."

- Alexandra Svokos

Powell on AI

On the topic of AI and whether it is leading to job losses, Powell allowed that that might be happening, but probably at a minor level right now, despite some prominent layoff announcements from big companies that cited greater reliance on AI.

Across the economy, job losses appear to be small, with relatively few people filing new claims for unemployment benefits. Powell noted that historically, new technologies often prompt fears of automation replacing human workers, but they normally end up making the human workforce more productive in the long run.

Still, he noted that the Fed is on guard against further deterioration in the labor market as part of its dual mandate to keep prices stable and maintain full employment.

- Jim Patterson

Powell on his replacement

Asked about what he hopes his legacy as Fed chair will be as his tenure draws to a close, Powell had a simple message, that he wants the economy to be in a good place when he makes way for whoever his successor turns out to be. That means low unemployment and inflation "under control."

Those happen to be the Fed's two institutional mandates all of the time, but considering the creeping concerns about whether the job market is weakening and whether inflation will behave next year, you can't blame Powell for patting himself on the back if he manages to reach those two objectives by the time he hands off leadership of the Fed next spring.

- Jim Patterson

Job creation, price stability - and wealth inequality

Powell discussed the concept that higher-net-worth and income folks are driving consumption, noting that "it's clearly a thing," especially as asset values, including housing and securities, are high, and the people who own those assets are typically those at the "higher end of income and wealth." (The question and his answer allude to a K-shaped economy.)

Is that sustainable, that the top-third of Americans are driving "way more" than a third of consumption? He muses, somewhat ominously, that's "a good question."

And that's why, he clarifies, he and the FOMC are so focused on building price stability and a strong labor market, as those factors help lower-income and net-worth people. A strong labor market, particularly over a long period, he said, is important for wage growth for people in the lower quartile.

- Alexandra Svokos

The Fed can't save the housing market

While many Americans look to the Fed for lower interest rates they hope will bring more affordable housing, there's little water in that well. For one thing, mortgage rates tend to follow the 10-year Treasury more closely than the Fed.

For another, though, there are factors beyond rates at play in the housing market that are driving up costs. Primarily, there's the problem of supply. Housing supply is low for two reasons: First, because America simply hasn't built enough in recent years. Second, because people aren't moving ... because their mortgage rates are so low from the post-pandemic period, they don't want to sell their house just to buy a house with a high price and high mortgage rate.

So, yes, it's something of a vicious circle the Fed will get blamed for. But until more housing is built, it's hard to see a way out of rising home prices, even if mortgage rates go down.

- Alexandra Svokos

What investors need to do after today's Fed meeting

Today's Fed meeting revealed "quite disparate points of view" among FOMC members that highlight "unanswered questions we're all asking about where the economy is headed next year," says Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.

The economy is in a delicate state right now, which could lead to weakness or higher inflation 2026, he adds. "This narrow balance is driving internal divisions within the Fed and more dissents."

And investors need to prepare their portfolios for these uncertainties, Schutte advises. "We’re encouraging investors to return to the fundamentals of investing, which means a focus on diversification and relative valuations – with an eye toward intermediate to longer-term relative returns."

For folks looking for a jumping-off point on how to position their portfolios, these core stocks are solid, long-term investments that can provide stable returns and steady growth. And these exchange-traded funds make our list of the best ETFs to buy for 2026 because they possess structural characteristics that make them attractive buy-and-hold options.

- Karee Venema

Markets get a boost from the Fed

All three main U.S. equity indexes closed higher on Fed Day following what many market participants may regard as an ideal scenario for the economy and the stock market described by the Federal Reserve.

The blue-chip Dow Jones Industrial Average closed higher by 1.1% at 48,057. The S&P 500 added 0.7% to 6,886, and the Nasdaq Composite was up 0.3% to 23,654.

The Fed's updated Summary of Economic Projections (pdf) reflects both concerns about the jobs market and persistent inflation as well as rosier growth expectations.

The median forecast shows 2.3% GDP growth in 2026, up from 1.8% in September, core inflation of 2.5%, down from 2.6%, and unemployment steady at 4.4%. Altogether, it adds up to only one rate cut in 2026.

The yield on the 2-year U.S. Treasury note ticked lower to 3.546% from 3.613% on Tuesday. The 10-year yield was down to 4.155% from 4.186%, and the 30-year was at 4.794% vs 4.809%.

The average year-end 2026 price target for the S&P 500 is up from around 6,500 in early September to 7,269 as of December 9, notes LPL Financial Chief Technical Strategist Adam Turnquist.

Turnquist cites the AI boom, stimulus from President Donald Trump's One Big Beautiful Bill and easing monetary policy as "key catalysts" for even more upside.

"A bottom-up analysis," he elaborates, "which aggregates analyst price targets for individual S&P 500 components, suggests the index could reach 7,900 by the end of next year."

– David Dittman

What's next for the Fed? FHN Financial's senior economist explains

Today's decision to cut rates was not unanimous, says Sophia Kearney-Lederman, senior economist at FHN Financial. And the dot plot showed that there were four soft dissents, "meaning four additional non-voters did not support the cut at the December meeting and would have preferred to leave rates unchanged."

Kearney-Lederman says talk will now turn to what's next for the Fed. "As Chair Powell said in the press conference, 'All across the Committee, people see the picture pretty similarly, but see the risks quite differently.'"

While the median projection for interest rates at the end of 2026 was unchanged from September, the range of forecasts widened, she notes, adding that the closer the federal funds rate gets to neutral, the slower the pace of rate cuts will be.

The economist believes "the focus will now shift to the great deal of data to be released between now and the next FOMC meeting" in late January, though "as Chair Powell pointed out in the press conference ... there are likely to be some distortions to the data. This means Wall Street and the Fed will remain in wait-and-see mode.

- Karee Venema

This is the time of year when Wall Street strategists look into their proverbial crystal balls to get a sense of what investors may face in the new year. This year, Kiplinger Personal Finance Magazine spoke with Keith Lerner, the chief market strategist and chief investment officer for Truist Wealth.

Lerner says the U.S. stock market will contend with "a carousel of concerns" but should come out ahead in 2026, thanks to strong fundamentals. Read on to see what's behind Truist's bullish view.

Kiplinger: What do you see ahead for financial markets in 2026? Do you have a target price for the S&P 500?

KL: We don't do targets. When we think about markets, we take a weight-of-the-evidence approach and keep an open mind. We look through four main lenses: History, the economic cycle, fun­damentals and market signals.

Okay, let's start with history.

Warren Buffett said if all you needed was history, the richest people would be librarians. But it's a good starting point.

There's an old saying that's still true: Bull markets don't die of old age. We've had 10 bull markets since 1957. Seven of those have lasted more than three years. In year four, you had further gains every time — an average of 16%. But there's a caveat: Year three tends to be choppy, with an average return of 1%.

We really didn't have much of that in 2025, so maybe that takes a little bit away from the next year's gain. Either way, the average cumulative price gain for those seven bull markets is 229%. At this point [through October 31], we're up 91%. That suggests the bull market has further to go.

We also did a study that found when the Federal Reserve cuts in­terest rates with the market near record highs, a year later, stock prices are up more than 90% of the time, with an average gain of 13.1% — with the key caveat that we don't fall into recession. And I should add that as you move into the fourth year of a bull market, it's not unusual to see pullbacks, with drawdowns of 8% to 10% common.

What's your take on the economy?

We're looking for a slight uptick in economic growth in 2026, after landing at about 1.8% in 2025. So a little bit better, but not gangbusters. The economy helps us to say whether we want to be on offense or defense or somewhere in between. We still want to be tilted toward equities, because we think there's further to go. But we're not at maximum equity exposure because it's not the beginning of the cycle.

There are three main factors that we think will support the economic environment: One, the tax changes that we saw in mid-2025 won't get implemented, or we won't see the benefits, until 2026. Consumers will see some tax refunds in the first quarter when they file their taxes, so we'll hopefully get a little bit of a boost in consumer spending from that. There are a lot of incentives for businesses as far as capital expenditures and accelerated depreciation; that will be helpful for companies.

And on the tariff front, we're at a point where companies are adapting, and at least on the margin there will be more clarity than we saw in 2025. The last factor is that the Fed is cutting rates — we think toward 3% on their benchmark rate by the end of 2026, from a target range of 3.75% to 4.0% at the end of October.

What's the risk to your economic outlook?

There's a divergence between labor-market and other economic data. Some of the reports on gross domestic product look stronger, but the labor market, any way you look at it, is softening. If we show a negative job-growth trend, it suggests that consumer spending, which is two-thirds of the economy, is going to slow down. That's a risk, but not our base case.

Let's discuss fundamentals.

The north star for the bull market is still corporate profits. As the stock market has reached new highs, so have the estimates for earnings. This year we've seen earnings growth expectations broaden out from tech and growth stocks to the average stock and to small caps. In the past couple of months, we've seen earnings trends move up across the board.

Here's the tension in the fundamental story: Valuations by almost any historical metric are high. A price-earnings ratio is a reflection of confidence — the market is expecting good things to happen. If they don't, it could become vulnerable. We need to see an economy that continues to chug along, and we need to see this dominant theme of artificial intelligence, tech and rising earnings trends continue to support the market.

Are you worried about an AI bubble? If uptake of the technology slows, or it isn't monetized as expected, will the boom turn into a bust?

Every bull market has a dominant theme; this one's is AI. Think of it as the ChatGPT bull market. ChatGPT came out in November 2022; the bull market started in October.

People ask me all the time if we're in a bubble. There are definitely pockets of froth, but overall, we're not seeing it. The tech sector is up just over 30% year over year through October. Back in the 1990s tech bubble, we saw 12-month gains of over 100% — that's a red alert you're in bubble territory. The sector is trading at around a 30 P/E; back then, it was closer to 50. That doesn't mean there's no risk. But the tech sector has the strongest earnings trend — estimates keep getting moved higher. That's what we're watching.

What are the market signals you're watching?

One reason the bull market deserves the benefit of the doubt is that the primary uptrend remains intact. Stocks overall are trading above their long-term moving averages [a series of average closing prices over a certain period — say, the past 200 days]. And that's not just in the U.S. but around the globe.

As the bull market matures, we're also watching investor sentiment, although it's an indicator that works better at market bottoms, when there's a lot of fear, than at market tops. When people become complacent and you see huge inflows into the market or sentiment surveys that show more bulls than bears, that's risky.

I would say sentiment is a bit elevated, but we're not seeing extreme euphoria. The carousel of concerns continues to spin, and as one recedes another comes up. These concerns keep euphoria in check.

Given your outlook, what's your portfolio advice?

Although investor goals and risk tolerances vary, we generally maintain a slight tilt toward equities. Compared with a portfolio of 50% stocks and 50% bonds, we recommend around 52% in equities, 44% in fixed income, 2.5% in gold and the rest in cash.

In the equity bucket, we've got 76% in the U.S. and 24% in international. We're still Team USA — that's where the earnings are, and the innovation as well. We have an overweight position in large-cap stocks with a growth tilt, but the outlook for small caps is improving, with lower rates and improving profits.

We're neutral on international markets, but in a world where there are a lot of crosscurrents, you want to be diversified. International markets are still relatively cheap; there is more stimulus in Europe and a new leader in Japan that the market is looking at as pro-business. The dollar looks like it has bottomed, but if it weakens further, for whatever reason, that's a reason to own international stocks. We've also added to emerging markets but are still underweight relative to market benchmarks.

On the fixed-income side, we think yields will trend lower in 2026. We like intermediate-term, high-quality, plain-vanilla Treasuries. We're underweight on high-yield corporate bonds — we're taking our risks on the equity side.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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The September jobs report, delayed from its initial October 3 release date due to the record-long government shutdown, came in higher than expected. While this is good news for those worried about a sharp slowdown in the labor market, it does keep the odds of a December rate cut low.

According to the Bureau of Labor Statistics (BLS), nonfarm payrolls rose by 119,000 in September, beating economists' estimate for 50,000 new jobs. Figures for July were revised down by 7,000, from +79,000 to +72,000, while those for August were revised lower by 26,000, from +22,000 to -4,000.

These revisions result in 33,000 fewer jobs combined in July and August than previously reported.

As for September, job gains were seen in health care (adding 43,000) and social assistance (adding 14,000). However, federal government jobs declined by 3,000, and are now down by 97,000 since January.

The unemployment rate, which is calculated from a separate survey, ticked up to 4.4% from 4.3%. The data also showed that wage growth was 0.2% higher month over month in September and up 3.8% year over year.

"The delayed September employment data will likely not have had enough of an impact to convince the Fed to cut at the December meeting," says Ryan Weldon, investment director and portfolio manager at IFM Investors. "The minutes from the October meeting revealed clear apprehension from more than a few Fed members regarding support for a December cut, and the cancellation of the October jobs report due to the government shutdown will only reinforce a cautious approach in December."

Weldon adds that the Federal Reserve still considers the federal funds rate to be in restrictive territory, "but the data uncertainty and conflicting inflation and employment pressures will keep them cautious until the macro backdrop clears up."

According to CME Group's FedWatch, futures traders are now pricing in a 58% chance the Fed will keep interest rates unchanged when it concludes its next meeting on Wednesday, December 10, up from 1% one month ago. Odds are at 50% that the central bank will cut rates by a quarter-percentage point when it meets in January.

With the September jobs report now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for the Fed and investors going forward.

Experts' takes on the September jobs report and what it means for the Fed

"Thursday's jobs report was much stronger than expected and it's possible that the Federal Reserve may take more of a wait-and-see approach to rates in December, especially since there is still uncertainty over the economic data, which has only first started to come back online after the drought from the government shutdown. Thursday's jobs report suggests that the labor market is not as weak as feared." – Alexander Guiliano, Chief Investment Officer at Resonate Wealth Partners

"The Fed's decision when they meet in December is a tricky one, but there's a good chance that would be the case even with all of the data in hand. With risks to both sides of their dual mandate at odds, they're seeking clarity in an incomplete picture. We don't yet know when the next batch of consumer inflation data will be released, and this will be the last jobs report before their meeting. Fortunately, they will get some insight into the actual state-of-play in layoffs when the October JOLTS report is released the first day they convene." – Elizabeth Renter, Senior Economist at NerdWallet

"This combination — solid job gains and stable pay growth — complicates the Federal Reserve's task: it shows that labor demand remains firm, even as the Fed seeks clearer signs of cooling before committing to rate cuts. Interestingly, the initial reaction saw markets pricing in a higher chance of a cut likely focusing on the unexpected rise in the unemployment rate. As a result, the dollar pared back some of its daily gains, as did yields, whilst the stock market took it as another sign to build on yesterday's reversal. However, this momentum may fizzle out quickly as the data is digested further, with the potential for a continuation in the dollar rebound as markets reassess the rate cut odds." – Daniela Hathorn, Senior Market Analyst at Capital.com

"A December cut remains possible given continued labor market softness as expressed by the unemployment rate. Weak hard data and close-to-target inflation look set to drive policy going forward, despite recent hawkish noises. The setup is in place for Powell to continue his risk-management approach to the labor market before his term as Chair expires in May." – Kay Haigh, Global Co-Head of Fixed Income and Liquidity Solutions at Goldman Sachs Asset Management

"The one-two punch of a stellar Nvidia earnings report last night and a better-than-expected September jobs report this morning should give the market a boost, given that it directly addresses the two biggest concerns of the bears: an AI bubble and a moribund economy." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"Although job cut announcements have risen, actual layoffs remain tame as evidenced by this morning's decline in initial jobless claim filings back toward recent lows. We believe the December Fed meeting remains a toss-up, with the hawkish case being bolstered by strong headline job creation and the dovish case supported by the rise in the unemployment rate to 4.4%. More immediately, today's payrolls release is being viewed as a 'good news is good news' dynamic for equities, which we believe is appropriate given that today's data does not show downside risks to labor materializing while keeping the prospect for further rate cuts alive, whether next month or in 2026. This dynamic should provide support for risk assets in the near term." – Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments

"September's long-awaited jobs report offers a reminder that the labor market is cooling — and maybe faster than the headlines suggest. Payrolls rose 119,000, a mild upside surprise, but the unemployment rate climbed to 4.4 percent and is now closing in on the Fed's 4.5 percent projection ahead of schedule. The underlying trend is softer than it looks. That's why the more aggressive tone from the Fed lately feels misplaced. Inflation has eased ex-tariff related goods, labor slack is building, and today's data is stale and mixed at best. Tightening the screws now risks leaning into a slowdown already in motion." – Timothy S. Chubb, Chief Investment Officer at Girard

"From an investment perspective, we are all really looking for any signs of direction in the overall employment picture. Monthly payroll gains are part of that, but they are only one piece. Another indicator that can offer early insight is the quits rate. When people are less willing to quit, it generally means they know that finding a new job, especially a better job, is unlikely, which can portend higher unemployment." – Katie Klingensmith, Chief Investment Strategist at Edelman Financial Engines

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To help you understand what is going on in the economy, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we publish many (but not all) of our forecasts a few days afterward online. Here’s the latest...

Now that the federal tax credit has expired, what is the outlook for electric vehicles in the U.S.? Sales surged as buyers rushed to cash in on the credit before it expired on September 30, then crashed. Here’s how we see the EV market in the longer term.

Once a novelty, EVs are here to stay. But they will occupy a much smaller share of the market in the coming months and beyond, now that the $7,500 federal tax credit is no more. (Note that some states offer tax credits of their own.) Early this year, before talk of Congress axing the credit influenced buyers, EVs accounted for 7.9% of car sales. For the time being, we see that level dropping to 5-6% or so, as demand finds its natural, unsubsidized level.

Surveys show many consumers are interested in electric cars, even if they’re not ready to buy one. Manufacturers will keep building them, but in reduced numbers. Some existing EVs are already getting canceled, along with future models that automakers are now rethinking. Vehicle lineups that were supposed to transition to mostly or all EV in a few years now appear likely to stay mostly gas.

The good news for EV-curious consumers: There will be cheap used models hitting the market in the next few years. EV leasing soared after the Biden era made it easier to qualify for the federal tax credit that way. That flood of used vehicles will be returning to the market, giving value-minded shoppers lots of potential deals.

Cheaper, low-mileage used EVs may be the ticket to convincing wary buyers to consider going electric, now that demand from early adopters has been satisfied. Many drivers won’t be lured, either because an EV doesn’t meet their specific needs or a simple preference for gas. But a decent number of folks appear to be on the fence and may try a used electric model, if the financial math pencils out.

That being said, assuring potential buyers that used EVs’ batteries are sound will be key. Replacing EV batteries costs thousands, even tens of thousands, of dollars. Automakers and dealers will tout new “state of health” certifications showing the useful capacity an EV battery has. They may be rolled into automakers’ certified pre-owned programs, which inspect and vouch for quality used cars, and come with an extended warranty.

More public charging stations will also help, eventually. As of August, the U.S. had 229,000 public charging ports, though they tend to cluster around urban areas, vary in charging capacity and can be prone to failure. More and faster ones are needed. For now, EVs’ lost market share will likely be gobbled up by hybrid models. Consumers are really warming up to them as a compromise that keeps the familiarity and advantages of gas, with fuel efficiency boosted by batteries and electric motors. They’ll likely account for 15% of new car sales soon as more models come as hybrids.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Four out of five Americans in a survey by Discover this summer said they feel anxiety about their finances — an increase of nine percentage points since 2021 — and one-third characterized their stress as moderate to severe. The findings echo recent studies by Northwestern Mutual and Motley Fool, which found that more than half of Americans now worry about their finances at least three times a week.

Overall sentiment in the U.S. continues to deteriorate, with major gauges of consumer confidence falling in August. Topping the list of concerns: high inflation and everyday expenses, followed by job fears and worries about a recession.

“The change in trade policies and uncertainty over prices — most of our clients are aware of that, and it puts them on edge,” says certified financial planner Eric Walters, managing partner at Summit Hill Wealth Management in Greenwood Village, Colo.

The concerns are not unfounded. Several measures of inflation have been inching higher recently, and many retailers and consumer goods manufacturers are warning that prices will continue to rise due to tariffs. The latest analysis from the Budget Lab at Yale University suggests tariffs could add 1.8% to price increases this year, the equivalent of an average income loss of $2,400 per U.S. household. At the same time, employers are becoming reluctant to hire, creating another economic headwind.

What makes experts anxious, though, is that many people may make impulsive and possibly damaging money decisions to ease their worries, such as moving most of their retirement savings to cash or loading up on gold, cryptocurrency and other high-risk alternative assets.

“Everybody wants to get back into the driver’s seat of their lives financially, so they look at what they can control,” says CFP Bob Wolfe, founder of HealthyFP in Conshohocken, Pa.

These steps can help you tackle money worries in a healthy way.

Zero in on your biggest concern

Pin down what disquiets you the most, then work on a specific plan to address that worry. If high prices top your list, for instance, you might start by reviewing your budget to find ways to lower expenses, says Juan HernandezAriano, a CFP and director of WealthCreate in Houston. For example, you might be able to take advantage of available discounts, cancel little-used streaming services and subscriptions, or negotiate a lower interest rate on debt.

If you’re retired and inflation is fueling fears you could outlive your savings, consider shifting an additional three to six months’ worth of expenses from your investment portfolio to a lower-risk, easily accessible money market account or high-yield savings account that you can dip into as needed. That way, you’ll avoid selling stocks at a low if the market drops sharply again, HernandezAriano says. Temporarily lowering your annual portfolio withdrawals — say, from 4% to 3% — can help as well.

Naming your next three moves if your worst fears materialize is also a good exercise, HernandezAriano says. If you’re worried about losing your job, for example, you might assess your cash reserves to make sure you have enough on hand to meet your immediate bills, plan to file for unemployment benefits, and figure out how you’d maintain health insurance.

“The anxiety is reduced simply because you start flushing out that uncertainty,” HernandezAriano says.

Avoid habits that fuel your anxiety

Keeping up with the 24/7 news cycle and reading constant social media posts about the economy can trigger your brain to release “a burst of dopamine, which feels good and trains the brain to seek out more news,” says CFP and therapist Joy Slabaugh, founder of the Wealth Alignment Institute. But doing that ultimately feeds your anxiety, so “set up safeguards to turn that off,” she advises. Maybe limit your financial news viewing to an hour or less a day or stop following alarmist economic pundits on social media platforms.

Similarly, take a break from looking at your portfolio balances. “Those who check their investments frequently have a greater likelihood of seeing the inevitable short-term ups and downs,” says Walters, even though over the long term the market typically rises.

Clients who instead rely on quarterly updates have lower stress, Walters says — and research shows they average significantly higher returns on their investments as well.

Get perspective

Accept that some factors are out of your control, says Patrick Huey, a CFP and owner of Victory Independent Planning in Naples, Fla. He likes to offer his clients a reassuring historical perspective: Periodic bear markets and recessions are normal, and so is eventual recovery. “They feel like, okay, this isn’t the first time this has happened,” he says.

Instead of checking your portfolio, review your long-term financial plan, which should account for market ups and downs, recessions, and other setbacks, such as higher-than-average inflation. It also offers a concrete representation of your wealth and goals, how far you’ve come, and where you’re going. “It lowers the stress level,” Walters says. “You feel like there’s a map for your life.”

Allow yourself some grace

Avoid beating yourself up for feeling anxious, says Rick Kahler, a financial adviser and certified financial therapist in Rapid City, S.D. Instead, use the emotion to your benefit. “It’s what we call a trailhead to explore,” Kahler says. “It will lead us to some place that can be really productive.”

There’s also a good chance you’re not the only one dealing with financial jitters. Reaching out to trusted family and friends can help. As Slabaugh notes, “There can be comfort and solidarity in realizing you’re not the only one who feels this way.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Following a recent string of lower-than-expected jobs data, the central bank resumed rate cuts at its September meeting. And while the ongoing government shutdown has delayed the release of key economic data – including the September jobs report – private data releases, such as the ADP Employment Report, underscore weakness in the labor market.

The Kiplinger team reported live on the October Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy.

Best Stocks to Buy for Fed Rate Cuts | Falling Interest Rates: What They Mean for Homeowners, Savers and Investors | Quiz: How Well Do You Know the Fed?

September CPI comes in lighter than expected

The September Consumer Price Index showed that President Donald Trump's tariff policies have had a muted impact on cost pressures – and all but guarantees the Federal Reserve will lower the federal funds rate on Wednesday afternoon.

According to the Bureau of Labor Statistics, headline CPI was up 0.3% month over month in September, slower than the 0.4% rise seen in August and the 0.4% increase economists expected.

The CPI was 3.0% higher year over year, a quicker pace than the month prior. Still, the results arrived below the 3.1% increase economists anticipated.

Gas prices were the biggest contributor to the increase in headline CPI, surging 4.1% from August to September. Food costs were also up last month, rising 0.2%.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, rose 0.2% month over month and 3.0% year over year – coming in below August's figures and economists' forecasts.

"Inflation might not be slowing, but it's not surprising to the upside anymore," says David Russell, global head of market strategy at TradeStation. "The details are positive, with shelter and transportation services moderating. Some key parts of the basket are cooling even if tariffs nudge items like apparel higher."

Russell adds that the September CPI report keeps the Fed on track to cut rates by a quarter-percentage point at next week's meeting, and will likely have policymakers striking a more dovish stance moving forward.

While delayed from its originally scheduled October 15 reporting date, the BLS released today's data so that the Social Security Administration could calculate the cost-of-living adjustment (COLA). But with data collection services still suspended, it's unclear when we'll see the next CPI report.

- Karee Venema

Fed meeting schedule for 2025 and 2026

The next Fed meeting, which runs from October 28 to October 29, marks the seventh gathering of 2025. That means there's one more to go after that.

"The committee meets eight times a year, or about once every six weeks," writes Kiplinger contributor Dan Burrows in his feature, "When Is the Next Fed Meeting?".

The Federal Open Market Committee "is required to meet at least four times a year and may convene additional meetings if necessary," Burrows adds, noting that "the convention of meeting eight times per year dates back to the market stresses of 1981."

Fed meetings last two days and wrap up with the release of a policy decision at 2 pm Eastern Standard Time. This is typically followed by the Fed chair's press conference at 2:30 pm.

Here is the full Fed meeting schedule for 2025:

• January 28 to 29
• March 18 to 19
• May 6 to 7
• June 17 to 18
• July 29 to 30
• September 16 to 17
• October 28 to 29
• December 9 to 10

And here's the full Fed meeting schedule for 2026:

• January 27 to 28
• March 17 to 18
• April 28 to 29
• June 16 to 17
• July 28 to 29
• September 15 to 16
• October 27 to 28
• December 8 to 9

- Karee Venema

Expect more rate cuts in 2026, says BMO

The September CPI report all but locks in quarter-percentage-point rate cuts in both October and December, says Douglas Porter, chief economist at BMO Financial Group.

"Looking a bit further ahead into 2026, we suspect that the near-absence of serious tariff-related inflation sets the stage for additional cuts," the economist adds. "After all, core goods prices, the very area one would expect tariffs to affect, rose a moderate 0.2% last month and 1.5% in the past year. True, that's up from essentially no inflation in this category in the decade up to 2020, but it's not the shape-shifting pace that many analysts expected in the wake of double-digit tariffs."

Porter adds that moderating shelter inflation – it rose just 0.2% on a monthly basis in September after a 0.4% rise in August – should have headline and core inflation averaging annual increases of just below 3% next year.

As such, he's expecting an additional 75 basis points of rate cuts in 2026, bringing the federal funds rate south of 3% when all is said and done.

- Karee Venema

Wall Street shouldn't expect a half-point rate cut anytime soon

Today's mostly benign inflation report for September should make the Federal Reserve more comfortable with cutting short-term interest rates by another quarter-point at their policy meeting on October 29.

Although September employment data has not been published because of the ongoing federal government shutdown, the Fed will assume that the labor market weakness shown in the August report is continuing, which justifies a rate cut.

It seems likely that the Fed will also cut by a quarter point at its December 10 meeting before pausing. However, those who are expecting a half-point cut at either of these two meetings are likely to be disappointed.

Read more: Kiplinger Inflation Outlook: Stable for Now, but With Signs of Increasing Tariff Pressure

- David Payne

It's a big week ahead for Wall Street

Next week will be a busy one on Wall Street. In addition to the Fed meeting, market participants will also have a jam-packed earnings calendar to sift through.

Among the most notable names reporting are Alphabet (GOOGL) on Wednesday evening, and Amazon.com (AMZN) and Apple (AAPL) after Thursday's close.

"So far, Q3 results are off to a good start – S&P 500 earnings are up around 9% year over year, marking the ninth straight quarter of growth, the longest streak since 2018," says Raymond James Chief Investment Officer Larry Adam. "Plus, 82% of companies are beating EPS estimates – the best showing since Q3 2023."

Additionally, President Donald Trump is scheduled to talk with Chinese President Xi Jinping on Thursday ahead of the APEC summit in South Korea. Trade tensions between the two countries have escalated in recent weeks, though Adam notes that this appears to be posturing ahead of the November 10 trade deadline.

"Neither side wants to look weak, but neither wants a repeat of the turmoil earlier in the year," Adam says. "While it's unrealistic to expect the Trump-Xi meeting to resolve all issues, even a shift toward calmer rhetoric could help move negotiations forward."

- Karee Venema

Stocks notch new highs ahead of Fed week

The three main indexes finished at record highs on Friday. At the close, the Dow Jones Industrial Average was up 1.0% at 47,207, the S&P 500 was 0.8% higher at 6,791, and the Nasdaq Composite had gained 1.2% to 23,204.

Over in the bond market, the 2-year Treasury yield slipped 2 basis points to 3.48% and the 10-year Treasury yield ticked up 8 basis points to 3.997%, both near their lowest level of the past 12 months.

- Karee Venema

Who gets to vote at the October Fed meeting?

The Federal Open Market Committee (FOMC) has 12 total members, eight permanent and four who rotate each year.

The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed.

Four regional Fed presidents are rotated in each calendar year.

The 2025 FOMC voting committee consists of:

• Fed Chair Jerome Powell
• Vice Chair Philip Jefferson
• Fed Governor Michael Barr
• Fed Governor Michelle Bowman
• Fed Governor Lisa Cook
• Fed Governor Stephen Miran
• Fed Governor Christopher Waller
• New York Fed President John Williams
• Boston Fed President Susan Collins
• Chicago Fed President Austan Goolsbee
• St. Louis Fed President Alberto Musalem
• Kansas City Fed President Jeffrey Schmid

In 2026, the presidents from Cleveland, Philadelphia, Dallas and Minneapolis will rotate in as FOMC voting members, according to the Federal Reserve.

- Karee Venema

Barclays economists expect two more rate cuts in 2025 and two in 2026

Ongoing elevated downside risks to the labor market will likely encourage the Fed to cut interest rates by a quarter-percentage point on Wednesday, say Barclays economists.

The group expects Fed Governor Stephen Miran – who voted for a half-percentage-point cut in September – to dissent once again in favor of a 50 basis-point reduction.

"We expect hawks to support the cut but would not be surprised if [Kansas City Fed President Jeffrey] Schmid or [St. Louis Fed President Alberto] Musalem dissented in favor of an unchanged rate," the Barclays economists add.

And given the risks to the labor market and little change in inflation, the group is anticipating another rate cut in December and two more in 2026 – at the Fed's March and June meetings.

The economists say there's a possibility that the FOMC will announce the end of quantitative tightening, which Fed Chair Jerome Powell hinted at in a recent speech, on Wednesday afternoon, but think this is more likely to occur in December.

- Karee Venema

Will the Fed cut rates in October?

The Federal Reserve is widely expected to cut interest rates at its October 28-29 meeting as inflation holds steady and downside risks to the labor market remain.

As of October 25, CME Group FedWatch showed futures traders are pricing in a 98.3% probability the FOMC will lower the federal funds rate by 25 basis points (0.25%) to a range of 3.75% to 4.0%. This would mark its lowest level since late 2022.

- Karee Venema

Economic growth remains strong, according to S&P Global

S&P Global said Friday that "U.S. business activity growth accelerated in October to the second-fastest so far this year." This is according to its flash Purchasing Managers Index (PMI) data, with both its Services PMI and Manufacturing PMI hitting a two-month high in the initial October reading.

"Improvements in output and new work were recorded in manufacturing and services, though both sectors signaled falling exports," S&P Global stated in its report. "Factories also reported falling input buying amid a steep drop in backlogs of work and an unprecedented build-up of unsold stock."

The data also showed that employment growth improved, though the pace of job creation was "modest" and job growth was "limited by a worsening of business confidence, principally reflecting ongoing concerns over the impact of government policies."

Chris Williamson, chief business economist at S&P Global Market Intelligence, said that despite signs of continued economic growth, business confidence is deteriorating amid worries over the impact of policies, most notably tariffs.

As one example of the struggles businesses are facing, manufacturing input costs remain high due to tariffs, but companies "often reported difficulties passing higher costs on to customers in the face of subdued demand and intense competition."

- Karee Venema

How can you invest for lower interest rates?

With the Federal Reserve expected to cut rates at its two final meetings of 2025, many investors may be wondering how they can prepare their portfolios.

One way is to seek out high-quality growth stocks, which tend to see outsize benefits from lower interest rates.

This happens for two reasons, says Kiplinger contributor Charles Lewis Sizemore, CFA. For one, lower rates make capital cheaper and "young, fast-growing companies often rely on external funding."

Additionally, lower interest rates boost the current value of future profits, which increases valuations for firms with long-term earnings potential.

Read more: How to Invest for Fall Rate Cuts by the Fed

President Trump announces 10% tariffs on Canada

After calling off trade talks with Canada on Thursday night in response to a television ad featuring excerpts from one of former President Ronald Reagan's national radio addresses, President Donald Trump said he is implementing an additional 10% tariff on the country.

No other details were given in Trump's Truth Social post other than this 10% tariff will be "over and above what they are paying now."

"Just to recap," says Douglas Porter, chief economist at BMO Financial Group, "the U.S. has imposed a 50% tariff on steel and aluminum, up to 25% tariff on vehicles, a 45% tariff on lumber."

Porter adds that he expects the Bank of Canada to cut its key interest rate at its meeting this week (October 29) due to these deteriorating trade conditions.

- Karee Venema

What time will the Fed statement be released and what changes are expected?

The Federal Open Market Committee will release its updated policy statement at 2 pm Eastern Standard Time on Wednesday, October 29.

"Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated," the committee wrote in its September statement.

This time around, Deutsche Bank economists anticipate several changes based on what Fed Chair Powell had to say during his October 14 speech at the National Association for Business Economics Annual Meeting.

"Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago," Powell said in his speech. "Data available prior to the shutdown, however, show that growth in economic activity may be on a somewhat firmer trajectory than expected."

As such, Deutsche Bank economists "expect the Committee to tweak the first line in a slightly more hawkish direction by stating, 'Preliminary indicators suggest that growth in economic activity has firmed since the first half of the year.'"

The group believes the FOMC will leave the mention of "elevated" economic uncertainty unchanged in the second paragraph of the statement, but they expect the committee to announce the end of its balance sheet runoff program, or quantitative tightening, in the third paragraph.

- Karee Venema

How well do you know the Fed?

Fed meetings have become key events on Wall Street after inflation hit a pandemic-induced 40-year peak in 2022 – which forced the central bank into an aggressive rate-hiking campaign that lifted the federal funds rate to its highest level in more than two decades.

But how well do you know the Fed?

With the next Fed meeting on deck, we decided to test your basic knowledge of the Federal Reserve and how its actions impact you and your money.

Quiz: How Well Do You Know the Fed?

Stocks are set to start Fed week at new highs

The three main stock market indexes are all pointed higher ahead of Monday's opening bell as upbeat U.S.-China trade headlines boost sentiment.

Reports from over the weekend suggest the two countries have hashed out a framework for a trade deal ahead of this Thursday's meeting between U.S. President Donald Trump and Chinese President Xi Jinping.

"We are moving forward to the final details of the type of agreement that the leaders can review and decide if they want to conclude together,” U.S. trade representative Jamieson Greer told reporters Sunday. The negotiations included export controls and reciprocal tariff extensions.

At last check, Dow Jones Industrial Average futures were up 0.5%, the S&P 500 futures were 0.8% higher, and futures on the Nasdaq-100 jumped 1.3%. On Friday, the indexes ended the week at new record closing highs.

The bond market has it right, says Manulife John Hancock Investments strategists

Manulife John Hancock Investments Co-Chief Investment Strategists Emily Roland and Matt Miskin will be watching the 2-year Treasury yield and the U.S. dollar this Fed week.

While the strategists say there is no perfect predictor of Fed policy, the yield on the 2-year government bond note has proven to be one of the best.

The yield is currently hovering around 3.5% – near its lowest level in the past 12 months – and the strategists think a more dovish Fed could send it even lower.

"The bond market is currently pricing in 2 more cuts in 2025 and then three more in 2026," write Roland and Miskin in emailed commentary. "To us, this seems about right. They want to keep cutting to get closer to neutral, but want to save some cutting dry powder in case they need it." And the central bank still has plenty of room to ease, if needed, the pair adds.

Roland and Miskin also note that this week's Fed meeting could have big implications for the U.S. dollar. "A dovish Fed could cause the U.S. dollar to further weaken," they say.

As for the stock market, the two admit that elevated market valuations remain a concern, but "strong earnings growth, the Fed doing insurance cuts, and a potential trade deal are all positives reinforcing the recent strong global equity performance."

- Karee Venema

Bessent talks about Jerome Powell's replacement

Jerome Powell's term as Fed chair will expire on May 15, 2026. While it seemed possible earlier this year that President Trump might consider firing Powell before his term was up, this is unlikely to happen given the limited time left.

That said, we may have more solid clues as to who Jerome Powell's replacement will be by year's end.

On Monday, Treasury Secretary Scott Bessent said that the list of potential candidates to replace Powell as Fed chair has been pared down to five: current Fed Governors Christopher Waller and Michelle Bowman, National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh and BlackRock executive Rick Rieder.

Bessent is conducting interviews with the candidates and said he will send a final list to President Trump after the Thanksgiving holiday.

Earlier today, Trump told reporters that he expects to name the top pick by the end of 2025.

For what it's worth, Powell's term as a member of the Board of Governors of the Federal Reserve ends on January 31, 2028.

- Karee Venema

Fed Chair Powell and his purple ties

The odds of an October rate cut are high. It's also a safe bet that Fed Chair Powell will be wearing a purple tie during Wednesday's press conference.

That's because Powell always wears a purple tie … and there's a reason for it.

During an early April Q&A session with journalists at the Society for Advancing Business Editing and Writing conference, Powell was asked about the significance of his purple ties.

"At the beginning, the only significance was that I like purple ties," Powell replied. At his next press conference, he said he went to reach for a red or blue tie and thought, "Maybe not … so I wind up wearing purple."

He said now it's become "a thing," and it supports the fact that the Fed "is strictly non-political" and "bipartisan," and purple is a good color for that.

"Plus, I like purple ties," Powell concluded.

- Karee Venema

Where are all the Fed speakers right now?

The Fed-speak is non-existent right now. That's by design. And, setting aside arguments about correlation vs causation, markets are behaving well in the silence.

Since Saturday, October 18, and until Thursday, October 30, participants in the FOMC meeting have been bound by a Federal Reserve policy that limits the extent they can talk about the economy and interest rates.

These two-week "blackout periods" begin the second Saturday that falls 10 days before the next FOMC meeting and end the Thursday that follows the meeting. The Fed's blackout period was an unofficial practice that began in the 1980s. It was formalized in 2011 and reaffirmed in January 2025.

Fed-watchers see the policy as a measure against corruption and the potential for information leaks to distort markets. It also provides cover for open discussion during the Fed's most intense periods of policy-making.

Here is a schedule for all blackout periods through January 2027.

During the current quiet period, the S&P 500 is up 2.9%, the Dow Jones Industrial Average is 2.7% higher and the Nasdaq Composite has gained 4.0%.

- David Dittman

When is Jerome Powell speaking?

Fed Chair Powell will host a press conference at 2:30 pm Eastern Standard Time on Wednesday, October 29.

Barclays economists expect Powell to reiterate, as he did in his October 14 speech, that there has been little change in economic conditions since the central bank last met in September.

"He will likely note that growth in economic activity may be on a somewhat firmer trajectory than expected, due to AI-related investments and a resilient consumer," the group says.

However, they believe he will emphasize that "downside risks to employment remain elevated," and will "reiterate that the slower job gains reflect in part immigration restrictions and aging."

The economists also think the Fed chair will point out that weak shelter inflation helped the September CPI report come in below expectations, tariffs have increased prices on certain goods and will likely lift prices on other goods down the road.

That said, Barclays economists believe Powell will underscore the importance of keeping longer-term inflation expectations anchored and making sure that one-time price increases due to tariffs do not become "an ongoing inflation problem."

- Karee Venema

When is Trump meeting with Xi?

U.S. President Donald Trump will meet with Chinese President Xi Jinping this Thursday, October 30, while attending the APEC summit in South Korea.

"Recall that trade tensions have risen ahead of the meeting with China threatening to raise restrictions on rare earth supplies and President Trump responding with 100% tariffs on China set to begin on November 1," say Deutsche Bank economists. "Note, also, that the original trade truce negotiated last summer expires November 10."

However, Treasury Secretary Scott Bessent, following his meeting with Chinese Vice Premier He Lifeng, said that the two countries worked out "a very successful framework for the leaders to discuss on Thursday."

The negotiations reportedly included discussions on export controls, TikTok, soybean purchases and rare earths.

Bessent also said that he believes the November 10 reciprocal tariff deadline could be extended following the talks, but that decision ultimately rests with President Trump.

Still, as Deutsche Bank economists note, given the lack of economic data releases, the Trump-Xi summit is one of several substantial headline risks for market participants to contend with this week.

- Karee Venema

Stock futures point higher as Fed meeting kicks off

The stock market is signaling a higher open as the October Fed meeting kicks off. The Federal Open Market Committee will conclude its gathering tomorrow afternoon, with the central bank widely expected to announce its second straight rate cut.

At last check, Dow Jones Industrial Average futures were up 0.5% on well-received earnings from health care giant UnitedHealth Group (UNH). S&P 500 futures were 0.1% higher and Nasdaq-100 futures have risen 0.2%.

This follows Monday's positive price action, which sent the three main indexes to new record highs.

Bank of Canada, Bank of Japan and the ECB also meet this week

This week is a busy one for global central banks. The Bank of Canada will announce its latest policy decision tomorrow, October 29.

"We've long been on the dovish end of consensus for the Bank of Canada in 2025," says Robert Kavcic, senior economist at BMO Capital Markets. And with a soft economy and job market, "another rate cut at this meeting would be consistent with that view.

The Bank of Japan is expected to hold rates steady at its gathering on Thursday, October 30, but BlackRock strategists will be watching "for hints of the timing of a next hike."

The European Central Bank (ECB) will also announce its policy decision on Thursday. "The October ECB meeting should be a placeholder, with no rate change and only fine-tuning of communication," says the BofA Securities Global Rates & Currencies Research team. "We still expect a cut in December and March, but conviction on December is getting smaller."

Looking ahead, the Bank of England (BoE) could lower interest rates next Thursday, November 6, following last week's lower-than-expected inflation print. However, the central bank may wait until the late-November release of Chancellor Rachel Reeves's Autumn Budget.

"While a cut in November is more likely after [the] latest inflation data, it's by no means guaranteed," says Hal Cook, senior investment analyst at Hargreaves Lansdown.

- Karee Venema

Consumer confidence edges lower in October

The Conference Board's Consumer Confidence Index slipped to 94.6 in October from September's upwardly revised 95.6 reading.

The Present Situation Index, which measures consumers' opinions on current business and labor market conditions, rose 1.8 points to 129.3, while the Expectations Index, which tracks the short-term outlook for business, income and labor market conditions, fell by 2.9 points to 71.5.

"Consumer confidence moved sideways in October, only declining slightly from its upwardly revised September level,” said Stephanie Guichard, senior economist, global indicators at The Conference Board. "Consumers were a bit more pessimistic about future job availability and future business conditions while optimism about future income retreated slightly."

Confidence fell the most for those under 35 and those making less than $75,000 per year. It saw the biggest improvement from consumers aged 35 to 54 and those making over $200,000.

"Consumers' write-in responses were led by references to prices and inflation, which continued to be the main topic influencing consumers' views of the economy," added Guichard. "References to U.S. politics were up notably, with the ongoing government shutdown [was] mentioned multiple times as a key concern."

The report also showed that survey respondents' plans to buy used cars increased in October, while home-buying plans decreased. Additionally, consumers suggested they will spend less for the holidays this year.

- Karee Venema

Who appointed Jerome Powell as Fed chair?

Jerome Powell stepped into his role as Fed chair on February 5, 2018, after being nominated by then-President Donald Trump, who was serving his first term in the White House.

Powell's initial four-year stint as head of the Federal Reserve ended in 2022, but he was reappointed for a second four-year term on May 23, 2022, after being nominated by then-President Joe Biden.

Powell initially joined the Fed's Board of Governors in 2012 after he was nominated by then-President Barack Obama.

While Powell's second term as Fed chair will expire in May 2026, he will remain on the Fed's board until January 2028.

- Karee Venema

Should you open a CD ahead of the Fed announcement?

Demand for certificates of deposit (CDs) has been on the rise in recent years, thanks to elevated interest rates, which weighed on stock market returns and had investors seeking out less-risky options.

With the Fed unlikely to start cutting interest rates until September, now could be an ideal time to lock in attractive yields on CDs.

The difference in yields on short-term and long-term CDs is minimal at the moment, so if you do decide to open a certificate of deposit, your choice between the two could rest with how long you're able to lock up your cash.

Remember that when putting your money into certificates of deposit, you're unable to access it until the CD matures. If you do withdraw funds ahead of time, you'll be charged a fee.

Read more: Should You Get a Long-Term or Short-Term CD Before the Next Fed Meeting?

How did the economy do in Q3?

The first reading on third-quarter gross domestic product is supposed to be released ahead of Thursday's open, but we're unlikely to see it due to the ongoing government shutdown.

Still, a strong start to third-quarter earnings season tells "a good story" for GDP during the three-month period, says Scott Helfstein, head of investment strategy at Global X.

"It will be interesting to see whether the Fed will change language around the health of the U.S. economy," Helfstein adds. "Fed Chair Powell has been emphasizing the mounting risk to the labor market, but the real-time GDPNow numbers suggest growth is better than expected."

According to the Atlanta Fed, GDPNow is "a running estimate" of real gross domestic product growth based on the economic data available for that period. And the latest estimate from October 27 shows GDP growth of 3.9% – exceeding the strong GDP growth of 2.8% we saw in Q2.

- Karee Venema

Stock futures signal new highs on Fed Day

Stock futures are signaling a higher start Wednesday morning, which would put the main indexes on track to surpass the record highs hit on Tuesday.

At last check, Dow Jones Industrial Average futures were up 0.1% on strength in Nvidia (NVDA). Shares in the AI chip giant have gained more than 3% in premarket trading, putting the company on track to surpass a $5 trillion market capitalization, after President Trump said he will discuss Blackwell chips with Chinese President Xi Jinping at tomorrow's meeting.

S&P 500 futures are 0.2% higher and Nasdaq-100 futures have risen 0.3%.

"Investors are experiencing one of the most commanding momentum-driven markets since the internet," says Eric Teal, chief investment officer for Comerica Wealth Management. "The AI innovation is viewed as transformative, and the market's forward multiple is reflective of this optimism, topping 23 times."

While the bulk of these market returns have come courtesy of tech stocks, Teal notes that the "Fed easing cycle is now serving as an additional catalyst to spur valuations higher."

- Karee Venema

FHN Financial's senior economist expects a rate cut, QT announcement when the Fed meeting concludes this afternoon

"We expect the Federal Reserve will again cut the fed funds target rate by 25 basis points at the meeting this week," says Sophia Kearney-Lederman, senior economist at FHN Financial.

While the economist notes that there has been "a dearth of government data due to the federal government shutdown," she believes the central bank's assessment that downside risks to the labor market and upside risks to inflation likely haven't changed much since the September meeting.

As for the economic reports we have seen, Kearney-Lederman points to the private sector data from ADP, which hinted at continued slowing in payroll creation. And "the September CPI, the only government data to be released this month, showed inflation that remains above the Fed's target but that is not rapidly rising, with both headline and core inflation at 3.0% year-on-year."

Considering there has been little change to the labor market and inflation picture, the economist expects "the Fed to ease again as another risk management cut in support of the labor market, particularly considering the federal government shutdown adds downside risk to the labor market."

Kearney-Lederman is also in the camp that believes the Fed will formally announce the end to quantitative tightening this week, which is expected to begin in December.

"The Fed began shrinking its balance sheet in June 2022 with the intention to end balance sheet runoff when reserves were somewhat above what it judged to be ample reserve conditions," she explains. And with Chair Powell suggesting in a speech earlier this month that the end of QT "may arrive in the coming months, we think an official plan for ending QT could be announced this week."

- Karee Venema

Where can I watch Fed Chair Powell's press conference?

Fed Chair Jerome Powell's press conference will begin at 2:30 pm Eastern Standard Time this afternoon.

The presser can be viewed on the Federal Reserve's website or on the Fed's YouTube channel.

Pending home sales hold at a strong pace

Pending home sales held steady in September, matching the strong pace seen in August. Specifically, the National Association of Realtors' pending home sales index was unchanged from August, arriving at 74.8.

"Inventory has climbed to a five-year high, giving home buyers more options and room for price negotiation," says Dr. Lawrence Yun, chief economist at the National Association of Realtors. Still, "signings have yet to fully reach the level needed for a healthy market" as a weakening job market offsets a "record-high stock market and growing housing wealth."

The Northeast and South saw the largest increases in pending home sales, up 3.1% and 1.1%, respectively. The Midwest saw the largest decline, with activity down 3.4% vs August.

The "strong print in the largest regional housing market in the country, the South, could indicate that home sales will continue to improve, especially considering the recent decline in mortgage rates," says Raymond James Chief Economist Eugenio Alemán and Economist Giampiero Fuentes.

However, the economists note that "the housing market will continue to be a drag on economic activity during the next several quarters."

- Karee Venema

Nvidia stock trades above the $5 trillion market cap level

The U.S. stock market is trading in record-high territory ahead of this afternoon's Fed announcement, boosted by a rally in mega-cap tech stocks.

Nvidia (NVDA) is making one of the more notable moves today, with the semiconductor stock up 2.8% at last check, on track to become the first company to close with a $5 trillion market cap.

As for the main indexes, the Dow Jones Industrial Average is up 0.6%, the S&P 500 is 0.3% higher, and the Nasdaq Composite has added 0.6%.

Over in the bond market, the 2-year Treasury yield is up 1.2 basis points at 3.506%, while the yield on the 10-year Treasury is 1.4 basis points higher at 3.997%.

- Karee Venema

Consumer confidence continues to slip

The Fed is looking at a crunch from multiple angles as it tries to control for inflation while balancing employment data and assessing the impact of tariffs. But it's also facing political pressure, as President Donald Trump has stoked suspicion of the group's decision-making and Americans, long tired of inflated grocery prices, look for explanations. Political pressure, I should note, that Chair Jerome Powell has stalwartly denied being impacted by.

Trendlines show that consumer confidence is on a downward trajectory. As senior investing editor Karee Venema reported earlier in this blog, the Conference Board recently announced their Consumer Confidence Index reading had dropped in October, especially for those under age 35 and making less than $75,000.

More research released today, from WalletHub's Economic Index, seemed to underscore this slipping confidence. The WalletHub Economic Index reported a 9% decrease between this October and last, with a 17.6% decrease in respondents' likelihood of buying a home in the next six months and a 16.6% decrease in likelihood of buying a car in the next six months.

"It demonstrates that people are not optimistic about their financial future," said WalletHub analyst Chip Lupo. "People who have low financial confidence are likely to spend less money, make fewer large purchases, and pay down less debt than people with high confidence."

- Alexandra Svokos

The Fed has issued a rate cut

As expected, the Federal Reserve has announced a quarter-point cut.

The Fed's October decision

"The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months," the Fed said in its press release.

The Fed also decided it will no longer reduce its portfolio of securities as of December 1. The December 1 end concludes, for now, a more than three-year process of shrinking the Fed's balance sheet that began in June 2022. The Fed will still have about $6.5 trillion in its portfolio, substantially above the $4.5 trillion 10 years ago, before the pandemic.

Amongst the voting members, 10 voted in favor, while two voted against: Stephen I. Miran, President Trump's recent appointee, wanted a half-percent cut, and Jeffrey R. Schmid "preferred no change to the target range."

What does this mean for stocks?

It will be interesting to see how the market reacts while Powell is speaking.

Everyone expected the 25 basis point cut. Presumably, Wall Street will want to hear strong hints of another in December, and an open door to more in 2026.

- Jim Patterson

Reading the Fed's portfolio decision

While the overall runoff is ending, the Fed will continue to allow mortgage-backed securities (MBS) to mature. However, starting December 1, it will begin reinvesting the proceeds into Treasury securities.

This will shift the composition of its portfolio toward a higher concentration of Treasuries over the long run, consistent with its longer-term goal of minimizing its role in specific credit sectors like housing.

- David Payne

Will the rate cut bring down mortgage rates?

The end of shrinking the Fed's balance sheet seems like it ought to pull down mortgage rates, at least a little.

Shrinking it required other buyers to soak up all the Treasury debt issuance, which, all things being equal, should push up yields. So now that they have stopped doing that, I would expect that to lower bond yields, again, all things being equal.

But at the moment, the yield on the 10-year Treasury is up, not down. Not by a lot, admittedly, but still.

It's important to remember that while the Fed's decisions can influence things like savings accounts and short-term lending rates, mortgage rates tend to follow the 10-year Treasury yield more closely.

- Jim Patterson

Read more: How Does the 10-Year Treasury Yield Affect Mortgage Rates?

Chair Jerome Powell begins answering questions

Fed Chair Jerome Powell has begun taking questions at his press conference.

Asked bluntly if he is not comfortable with financial markets assuming the Fed will cut rates again at its meeting in December, Powell hedged, noting that there are "strong views" among the Fed's Open Market Committee, and that a cut is not a foregone conclusion.

He emphasized in his opening statement that the Fed faces a quandary now, with risks of bother rising inflation and rising unemployment. For now, the Fed believes the greater danger is to the labor market, which is why the Fed cut interest rates today.

But, "going forward is a different thing," suggesting the Fed could pass on cutting rates in December.

Markets have dropped a fair amount in the past few minutes, I presume in response to the "not a foregone conclusion" commentary.

- Jim Patterson

The Fed has only one tool, so have to choose only one of the between jobs and inflation goals at any one time.

- David Payne

Assessing data during the government shutdown

Asked how the Fed is assessing the labor market and the need for potential further rate cuts during the government shutdown, when normal federal unemployment data aren't being reported, Powell struck a cautiously optimistic note. He pointed to other, non-federal data, such as weekly unemployment benefit claims, that can still provide a meaningful read on the labor market.

And for now, Powell thinks those available data are not showing a significant risk of rising unemployment. He indicated that the signal suggests the labor market is holding steady, for now: "I don't want to say stable, but it's not clearly declining quickly."

If the shutdown ends soon, some of the regular data will become available, but otherwise they will have to rely on sources like the Fed's Beige Book.

- Jim Patterson and David Payne

Powell on inflation goal

Powell emphasized that the Fed is "absolutely committed" to hitting its 2% inflation goal. September's Consumer Price Index showed overall inflation running at 3%, though that was slightly less than economists had been expecting.

Powell said that, looking at the individual components of inflation, the Fed believes that current price increases linked to tariffs on imported goods are the major reason why overall inflation is notably higher than the Fed's 2% target. If — a big if — those tariff impacts fade, Powell seems to think that inflation should fall close to the 2% target that has eluded the Fed for several years now.

- Jim Patterson

Powell on other forces

When facing questions on the government shutdown, Powell seems to be trying not to criticize it. He keeps, instead, saying "data is unavailable."

He was also asked about the impact of AI, and specifically some recent layoff announcements related to AI potentially taking over jobs. Powell said AI could affect hiring or layoffs, but he doesn't see the impact on initial unemployment claims yet. He did say, though, that the Fed is concerned about a bifurcated economy, where lower income people are struggling while higher income people are pumping consumption.

- David Payne

Inflation and tariffs

Asked how much longer inflation will show upward pressure specifically due to the new tariffs that Washington has imposed on imported goods, Powell estimated that it could continue into 2026.

The impact of higher prices on imports typically takes months to work their way through to consumers, he explained. However, he added that once that process works itself out, inflation should start falling again, assuming that the tariff impact is a one-time effect, as opposed to setting off a cycle of new inflation because consumers start expecting prices to keep rising.

"This is how we believe and hope it will work out," he said. Considering how much harder the Fed's job would become if unemployment ticks up while inflation is rising, Powell was not kidding about the "hope" part.

- Jim Patterson

Powell on artificial intelligence

On the topic of artificial intelligence and whether investment in AI chips and data centers is keeping the economy afloat, Powell downplayed that concern. He acknowledged that AI spending is definitely one source of growth, but added that consumer spending overall is still strong, and that matters more than the billions tech firms are investing in AI capacity.

Powell noted that it may be primarily high-income consumers who are doing the spending these days, as folks on the lower end of the income spectrum are pulling back. And of course, those are the consumers who also tend to be the investors benefiting from the boom in AI-related stocks. If that boom turns to bust, those affluent consumers may rethink their spending habits.

- Jim Patterson

Why would the Fed not cut rates in December?

A few reasons. For one, they've already cut rates quite a lot. For another, Powell indicated different committee members have different views on what the neutral rate is (and there were two dissents in the votes this time around).

Plus, they're now 1.5 percentage points closer to neutral than they were a year ago, and some think they should wait and see for a while.

- David Payne

Overall impressions of Powell's press conference

Chair Powell's press conference has now ended, as he affirmed the Fed's decision to cut rates but stated a December cut was not a foregone conclusion. He communicated his view of the economy, despite lacking reporting due to the government shutdown, and once again avoided landmines of criticizing anyone or anything that could cause trouble. Powell indicated the Fed believes unemployment is a greater risk to the economy than inflation, at least for now, and he also indicated some concern about a bifurcated economy between lower- and higher-income people.

Spending by wealthy households "wouldn't drop sharply unless there was quite a sharp drop in the stock market," Powell said in answering whether he thought elevated stock prices are helping to prop up the economy right now. Generally speaking, the wealthy don't spend additional dollars they accrue when their portfolios gain value as readily as lower-income people do when their wages go up, he said. And in general, Powell said that the Fed does not pass judgment on whether any given level of the financial markets is right or wrong.

Still, he acknowledged that, to some extent, today's consumer spending is powered by the consumers who are doing best financially. Considering how much stocks and other asset prices have risen in the past couple of years, that seems like something to keep in mind going forward.

- Jim Patterson and David Payne

Stocks close mixed after Fed, bond yields climb

Stocks gave up early gains Wednesday after Fed Chair Powell suggested a December rate cut is "not a foregone conclusion." At the close, the Dow Jones Industrial Average was down 0.2% at 47,632 and the S&P 500 had shed 0.3 point to 6,890. The Nasdaq held on for a 0.6% gain to finish at 23,958 on strength in Nvidia.

Over in the bond market, the 2-year Treasury yield climbed 10.2 basis points to 3.596% and the yield on the 10-year Treasury rose 9.3 basis points to 4.076%.

- Karee Venema

Read more: Dow, S&P 500 Slip on December Rate Cut Worries, Nvidia Boosts Nasdaq: Stock Market Today

According to the Bureau of Labor Statistics, headline CPI was up 0.3% month over month in September, slower than the 0.4% rise seen in August and the 0.4% increase economists expected.

The CPI was 3.0% higher year over year, a quicker pace than the month prior. Still, the results arrived below the 3.1% increase economists anticipated.

Gas prices were the "largest factor" behind the monthly increase in headline CPI, according to the BLS, surging 4.1% from August to September. Food costs were also on the rise last month, up 0.2%.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.2% month over month and 3.0% year over year. Both figures were lower than those seen in August and economists' forecasts.

"Inflation might not be slowing, but it's not surprising to the upside anymore," says David Russell, global head of market strategy at TradeStation. "The details are positive, with shelter and transportation services moderating. Some key parts of the basket are cooling even if tariffs nudge items like apparel higher."

Russell adds that the September CPI report keeps the Fed on track to cut rates by a quarter-percentage point at next week's meeting, and will likely have policymakers striking a more dovish stance moving forward

According to CME FedWatch, futures traders are now pricing in a 99% chance the Fed will issue its next quarter-point rate cut at its meeting next week. Odds for a December rate cut have risen to 97% from 73% one month ago.

While delayed by a little over a week, the BLS released today's data so that the Social Security Administration could calculate the cost-of-living adjustment (COLA). But with data collection services still suspended, it's unclear when we'll see the next CPI report.

That said, with the September CPI data now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

Experts' takes on the September CPI report

"A very good inflation print, with muted impact from tariffs as expected. Gasoline prices hurt what could have been an even better number, but that is solvable. While inflation is still above target levels, this paves the way for the Fed to continue its rate-cut cycle, and further solidifies confidence in the bull market. Expect volatility on a broader trend upward in equity markets from here." – Jason Barsema, Co-Founder and President at Halo Investing

"Much like a Sherlock Holmes' story, inflation is the dog that didn't bark. So many people have been expecting a sharp increase in inflation and have positioned bearishly as a result, but the market is likely to keep squeezing the shorts until they realize that the economy – and corporate America – is more resilient than many expected." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"The CPI inflation report paves the way for the Fed to follow up its September meeting rate cut with another one next week. This will likely be a support to investors to push the stock market to new highs. Declining interest rates will grease the wheels of the economy and be a benefit to corporations and consumers." – Ross Bramwell, CFA, Managing Director of Investment Communications, Shareholder at HB Wealth

"While signs of tariff-induced inflation are apparent in select categories such as apparel and furniture, goods prices increased at a slower pace in September than August broadly. This suggests that the pass-through of higher tariffs to consumers has continued to undershoot expectations, which in turn has opened the door for the Fed to lower rates to support a cooling labor market." – Josh Jamner, Senior Investment Strategy Analyst at ClearBridge Investments

"The Fed has telegraphed a 25 basis point cut for next week as well as another 25 basis point cut for December. With the government shutdown and lack of available data, we expect these cuts to proceed. Once the government reopens and if we start to see weak unemployment data and the unemployment rate rises precipitously towards 5%, we could expect either a 50 basis point cut for December or the Fed to communicate a string of cuts in 2026." – Skyler Weinand, Chief Investment Officer at Regan Capital

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This may take some of the sparkle out of the magic of striking it rich in the market. But it's actually good news. The core strategies the wealthy use aren't some code known only to an ultra-secret club. Nor do they require you to be wealthy already to leverage them.

The difference between how the wealthy invest and how most retail investors invest isn't the tools. It's how those tools are used.

Anyone can buy low-cost ETFs. But it takes discipline to use that asset like a seasoned millionaire or billionaire would. Understanding these core investing rules separates durable wealth-builders from a market full of churners and burners.

Here are seven rules, habits and behaviors you can borrow from the wealthy to grow your portfolio right now.

Take a holistic view of your accounts

The key to investing like the wealthy is to understand what you have – all of what you have. Wealthy investors don't view their investment accounts in isolation. They look at all of them, from their bank checking accounts to every one of their retirement accounts.

The best way to approach this is with an online tool that allows you to aggregate all of your accounts in one place and then group them into categories, says Justyn Volesko, co-head of the family office practice at Cerity Partners. These categories can include brokerage accounts, bank accounts, retirement accounts, and any other account type you have.

"This will provide a holistic view of your balance sheet and allow for easier mapping of investment locations to minimize tax drag," he says. (More on tax-efficient location planning later.)

Diversify across asset classes, not just within them

You've probably heard "diversify, diversify, diversify" a thousand times. Most retail investors stop at diversification within their stock and bond holdings.

Wealthy investors take it a step further: They include alternative asset classes, such as real estate, private credit and private equity alongside public equities, says Yieldstreet CEO Mitch Caplan.

"True diversification means holding investments that don't all react to the same market forces," Caplan says.

"When public markets decline, some private market investments continue generating income based on fundamentals unrelated to daily stock prices."

Invest in public and private markets

Indeed, wealthy investors know how to exploit opportunities in private markets.

"Wealthy investors and institutions allocate 20% to 30% of their portfolios to private markets – private equity, real estate, private credit – while most individual investors have virtually zero exposure to these asset classes," Caplan says. "This creates a structural advantage" as "private markets offer different return profiles, lower correlation to stock market volatility, and access to income-generating assets that don't trade on exchanges."

Private markets once were largely off limits to smaller investors who couldn't afford entrance fees. But this is changing. New platforms including Republic, StartEngine and Yieldstreet are making private markets more accessible with lower minimums and better liquidity.

"This doesn't mean every investor should rush into these investments or that private markets belong in every portfolio," Caplan adds. These investments can be risky and highly illiquid. "The most important rule wealthy investors follow is structuring portfolios to capture returns from multiple sources."

Focus on income generation, not just appreciation

The allure of a skyrocketing stock is hard to miss. The wealthy understand the power of a quieter, often more reliable wealth-generator: income.

"Wealthy investors often prioritize assets that produce regular cash flow – real estate that generates rent, private credit that pays interest, businesses that distribute profits," Caplan says. "This income compounds over time and provides stability regardless of market conditions."

Income can also provide a hedge against inflation and help stabilize your portfolio during market volatility. You don't need to invest in real estate or private credit to generate income, either.

Dividend stocks and bonds can also pay regular interest, although the former may be less reliable because dividends are not guaranteed.

Invest as tax-efficiently as possible

The wealthy understand one of the most important principles of wealth accumulation: It's not what you earn, but what you keep that counts. Every dollar spent on taxes or fees is one less dollar that can compound on your behalf.

For the wealthy, "each investment decision is driven as much by its tax impact as by market outlook, and that discipline meaningfully improves long-term results," says Gary Quinzel, vice president of Portfolio Consulting at Wealth Enhancement.

Tax-efficient investing means more than just maxing out your retirement contributions, although you should definitely do that. Wealthy investors use that holistic account view to optimize not just their assets, but also their asset locations. They hold their most tax-inefficient investments in their most tax-advantaged accounts, Quinzel says.

For example, you could keep high-turnover investments or ones that produce ordinary income in retirement accounts. Meanwhile, your low-turnover investments and tax-exempt income generators can go in taxable accounts.

"These simple but powerful steps can save investors thousands in taxes and boost after-tax returns over time," Quinzel says.

The wealthy also know not to let market dips go to waste. They strategically sell investments that have lost money to offset gains or part of their ordinary income on their tax bills.

This practice is known as tax-loss harvesting, and it's not as complicated as it may sound. In fact, many robo-advisers now offer the service automatically, making it accessible to all sizes of investors.

Be relentless about costs and fees

Keeping as many dollars as possible also means not burning money on high-fee investments. Even the wealthy, who arguably have plenty of money to burn, know how to be frugal where it counts.

For retail investors, this means focusing on low-cost investments such as index funds and ETFs. Avoid any mutual funds with hefty sales loads or 12b(1) fees. You should also watch out for high-commission products as well as those with fine-print fees like surrender charges.

When wealthy investors use financial advisers, they often opt for fee-only fiduciaries. These professionals don't earn commissions for the products they sell, which helps eliminate conflicts of interest. They are also legally required to put your best interest before their own.

Leverage professional guidance to buy back time and peace of mind

Leveraging professional guidance also helps wealthy investors adhere to an essential truth: "Time is money."

The wealthy view their time and well-being as non-renewable assets. They may be highly involved in their investment strategy, but they rarely spend hours a day tracking markets or obsessing over daily portfolio performance. Instead, they outsource their anxiety to a trusted financial advisor.

For retail investors, this may mean using a robo-adviser or automated investment strategy, perhaps dollar-cost averaging. You could also self-impose rules that you will only check your account on a predefined schedule and you will not obsessively watch the news.

The media's job is to sensationalize events and spark an emotional reaction. They want to trigger a stress response because, to your brain, stress equals importance. And that's a poor basis for sound investing.

So, yes, time is money. But inner peace is priceless.

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Economic growth seems to be holding up OK. But the labor market is another story. You could even say that we’re in a jobs recession, with hiring down sharply and nearing the point of net job losses. What’s behind the slowdown, and does it portend an outright recession later?

Consider how much hiring has dropped this year. The rate of monthly job creation in the summer of 2024 averaged 89,000. Fast-forward to the summer of 2025 and it fell to just 29,000. More than half of all sectors and industries in the U.S. are seeing employment decline right now. The bulk of job gains now are in healthcare and hospitality. The hiring rate, meaning the number of new jobs as a percentage of total employment, is the lowest it has been since 2010, after the Great Recession.

Some of this decline was to be expected. The furious pace of hiring after the pandemic drop could never last. Tech companies, in particular, have shifted from hiring like mad to focusing efforts on developing artificial intelligence and using AI to automate work that used to require programmers.

But this is more than merely the cooling of a formerly hot jobs market. Businesses are largely avoiding hiring as they await clarity on trade policy. The federal government, a huge employer, has been shedding jobs this year as the White House has trimmed headcount. State governments are cutting back, too. Also, the labor force is shrinking amid the crackdown on illegal immigration.

And yet, there are positives propelling the economy, too. Although companies aren’t hiring for the most part, they also aren’t firing — layoffs remain low. The wealthy continue to spend freely, thanks in part to lofty asset values. Worker productivity, which had shown sluggish growth for years, has picked up recently, which suggests that companies can boost output, even without hiring much. The pro-growth features of the new tax law will start kicking in. It also headed off a scheduled rise in tax rates.

Add it up, and you get a picture of an economy balanced on a knife’s edge. It’s growing decently, but the factors underpinning that growth look fragile. A downturn in the stock market, for instance, could make affluent folks feel differently about spending so much. The massive capital investments being made in AI currently could end up being wasted if the tech doesn’t live up to its hype. A few large layoffs could tip slow job gains into outright losses, and spook consumers into spending less. (Watch the weekly initial unemployment claims for any signs of layoffs gaining steam.)

It wouldn’t take much going wrong to raise the specter of an actual recession, though it would likely be a mild one. Recessions aren’t inevitable, but they tend to hit when the economy is vulnerable to some new shock. Extra alertness is called for now.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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The more pressing issue for investors is the delay of economic data, which, depending on how long the shutdown wears on, could have a direct effect on the Federal Reserve's rate-cutting plans.

For those wondering, the next Fed meeting, slated for October 28-29, will still go on as scheduled even if the shutdown continues through the end of the month. The Fed is an independent agency and is not impacted by the lapse in funding.

But, "the suspension of economic statistical releases will make it harder to track the state of the economy during the shutdown," says Bill Adams, chief economist at Comerica Bank. "That may cause financial markets to react more than usual to private data releases," including this morning's release of ADP private payrolls.

Ahead of the opening bell on Wednesday, October 1, ADP said private employers shed 32,000 jobs in September, missing economists' estimates for the addition of 45,000 new positions.

"This was the weakest result in over two years and the first back-to-back declines since the pandemic," says Sal Guatieri, senior economist at BMO Capital Markets, adding that "businesses are just not in a hiring mood."

The September jobs report is unlikely to be released this Friday

On this week's economic calendar, the September jobs report was scheduled to be released ahead of the open on Friday, October 3. Barring a quick funding resolution, the data will likely be delayed.

According to a contingency plan released by the Department of Labor, the Bureau of Labor Statistics, which publishes key economic reports including data on employment, inflation and productivity, "will completely cease operations" during the shutdown.

The Labor Department also notes that economic data "scheduled to be released during the lapse will not be released" and that "all active data collection activities for BLS surveys will cease."

What other data will be impacted by the government shutdown?

Other data releases that could be impacted by an ongoing government shutdown include:

• Construction spending (August data was due October 1)
• Initial jobless claims (weekly data released every Thursday morning)
• Factory orders (August data was due October 2)
• Consumer Price Index (September data is due October 15)
• Producer Price Index (September data is due October 16)
• Retail sales (September data is due October 16)
• Building permits and housing starts (September data is due October 17)
• Import prices (September data is due October 17)

How will this impact investors?

As noted, government shutdowns have had a muted impact on long-term stock returns.

"Historically, markets were not materially impacted by a shutdown," says LPL Financial Chief Equity Strategist Jeff Buchbinder. "For example, in 2013, the government was shut down for 16 days during the first part of October. The S&P 500 had some down days but overall, the equity market took all the political drama in stride with a 3.1% advance during those 16 days."

That said, shutdowns – especially prolonged ones – can introduce an additional layer of uncertainty in markets.

As such, it is prudent for market participants to remember one of the most important rules of investing when volatility ramps up: don't panic. Investing in the market is a marathon and not a sprint. As we've said time and time again, wealth is built over decades, not days.

One way to protect portfolios against market volatility is to hedge with options – particularly put options – which can create a buffer against potential downside. And with the Cboe Volatility Index (VIX) still at relatively low levels, the cost to buy short-term options insurance isn't too expensive at the moment.

As for equities, investors can seek out traditional safety plays. These can include the best dividend stocks, which "tend to hold up better in market drawdowns," writes Kiplinger contributor Dan Burrows.

To spread risk out over a basket of stocks vs individual equities, investors can also seek out the best dividend growth ETFs or low-volatility ETFs.

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Japan has entered a pivotal moment in its economic history, undertaking its most ambitious policy and structural reforms in a generation to escape from decades of stagnation. The nation’s post-war boom ended abruptly in the early 1990s, ushering in three "lost decades" of falling prices, anemic growth and a moribund stock market. Now, after a radical and long-waged battle against deflation, the frost is finally beginning to thaw.

For years, the Bank of Japan (BoJ) deployed an arsenal of unprecedented stimulus, culminating in a negative interest rate policy designed to shock the economy back to life. That experiment appears to have finally worked. Prices are rising meaningfully, and in a landmark policy shift in 2024, the central bank officially ended its era of extraordinary easing, confident that a virtuous cycle between wages and prices was at last taking hold. Savers and workers are feeling the effects, and with Japanese stocks recently hitting a 35-year high, a cautious optimism has returned. However, these efforts are pitted against the formidable and accelerating pressures of a profound demographic decline, heightened political uncertainty, and the complex risks associated with unwinding decades of monetary stimulus. The long-term outlook is one of modest but positive growth, a trajectory heavily dependent on deep-seated reforms gaining traction.

Japan's New Political Wrinkle

Adding a new layer of complexity is a sudden bout of political instability. Prime Minister Shigeru Ishiba announced his resignation on September 7, 2025, after his ruling coalition lost its majority in the July upper house elections. The ensuing leadership race injects significant policy uncertainty at a critical juncture. To secure cooperation from opposition parties, all of which favor fiscal expansion, the next government will likely adopt a more generous spending stance. This raises the risk of looser fiscal policy, creating upward pressure on long-term bond yields and complicating the BoJ’s carefully laid plans for further interest rate hikes.

The Twin Policy Challenges

This political turmoil compounds Japan's two monumental and deeply intertwined policy challenges: managing the world's largest public debt burden while simultaneously normalizing monetary policy.

Japan's gross government debt stands at a staggering 264% of GDP, the highest among developed nations. For decades, this has been manageable for two reasons: The vast majority is held by domestic investors, and the BoJ's ultra-low interest rates kept borrowing costs negligible. But as the BoJ pivots, that stability is no longer guaranteed. With interest rates rising, the cost to service this colossal debt will inevitably increase, creating a direct conflict between monetary and fiscal stability. According to Ministry of Finance estimates, a sustained 1 percentage point increase in interest rates could nearly double the government's interest payment expenses within a decade.

This creates a contradiction. The BoJ's very definition of success — achieving its 2% inflation target, which requires higher interest rates — is the primary threat to the Ministry of Finance's ability to sustainably manage the national debt.

The Demographic Drag

The most formidable constraint on Japan's long-term outlook is its demographic crisis. The country is not merely aging; it is a "super-aging" society, with nearly a third of its population over 65. Having peaked at 128.5 million in 2010, the population is projected to fall below 100 million by 2048.

This has severe economic consequences. The shrinking workforce is the primary cause of acute labor shortages, with one study projecting a shortfall of 11 million workers by 2040. This demographic drag acts as a powerful structural brake on growth. Yet, this shift has also created a bifurcated reality. While the overall economy is constrained, a powerful "silver market" of consumers aged 60 and over has emerged, accounting for an estimated ¥115 trillion in annual spending — a remarkable 48% of all personal consumption.

Japan's Quiet Revolution

In the face of these headwinds, a quiet revolution is taking hold in Japan’s corporate sector. For years, Japanese firms were notorious for hoarding cash and operating under convoluted governance structures that shielded management from accountability. This led to the so-called "Japan discount," where solvent companies persistently traded below their book value.

Spurred by a "name and shame" campaign from the Tokyo Stock Exchange, a profound cultural shift is underway. The exchange has pressured companies to improve capital efficiency and enhance corporate value, and firms are responding. In fiscal year 2024, share buybacks surged to a record ¥10 trillion, while dividend payouts reached ¥16 trillion, marking a decisive move away from unproductive cash hoarding.

This is one of three interconnected pillars of a national reform agenda. The second is a push to remake the rigid labor market through the "New Trinity" of reforms: reskilling workers, transitioning from seniority-based to job-based pay, and promoting labor mobility. The third pillar is a national mandate for digital transformation, driven by stark warnings of a "2025 digital cliff" — a scenario where failure to modernize legacy IT systems could result in massive annual economic losses.

Geopolitical Realignment

Geopolitically, Japan is repositioning itself amid escalating U.S.-China tensions. Alarmed by supply chain vulnerabilities revealed during the pandemic, Tokyo is pursuing a "China Plus One" strategy to de-risk its supply chains, using subsidies to encourage firms to move production back home or to friendly nations in Southeast Asia.

Simultaneously, Japan is deepening its alliance with the United States. In a trade deal agreed in July 2025, Japan avoided a threatened 25% U.S. tariff, with a new baseline of 15% set for most goods, including cars. In exchange, Japan committed to investing over half a trillion dollars in key U.S. sectors like pharmaceuticals and semiconductors. While the deal reduces uncertainty, the outlook for Japanese exports remains fundamentally weak.

Ultimately, Japan's future will be the world’s first test case for whether an aging, highly indebted nation can innovate its way back to healthy and balanced economic growth.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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If you're reading this story, you're probably an investor. And, if you're an investor, you're probably well aware of the Bureau of Labor Statistics (BLS) and the Securities and Exchange Commission (SEC) and what those agencies do, generally speaking.

So you probably have an opinion about questions of data integrity. At the same time, as a trader friend of mine, a pro, likes to say, "Price is the only thing that pays."

And I have good news for you: You can express your opinion in the form of a hypothesis, test it in the market, perhaps even profit from it.

And, if there is an actionable market response to recent changes inside the executive branch and/or President Donald Trump's public statements about SEC reporting, here are some ways to play it.

Let's take a quick look at why markets are focused on questions of data integrity. Then we'll see how to invest for rising data-integrity risk.

Why questions around data integrity are rising right now

Data integrity was a bigger deal than it otherwise would have been when the Department of Labor's Bureau of Labor Statistics announced late on Friday, September 19, that it was delaying the release of results of its 2024 Consumer Expenditures Surveys "with no explanation," multiple financial media headlines noted.

Markets have been unusually curious about what's happening inside the executive agency since August 1, when President Trump fired Commissioner Erika McEntarfer after the BLS reported weak jobs growth in July, including major downward revisions to May and June hiring numbers.

President Trump said on Truth Social that McEntarfer had "RIGGED" jobs figures "to make the Republicans, and ME, look bad" and removed the labor economist from her role running the BLS data-collection effort.

There was no similar social media reaction to the dismal August jobs report and a subsequent BLS annual update showing the U.S. economy created nearly a million fewer jobs from April 2024 through March 2025 than initially estimated.

However, on September 10, the Labor Department's Office of Inspector General opened an investigation into "the challenges that Bureau of Labor Statistics encounters collecting and reporting closely watched economic data."

The letter informing Acting Commissioner William J. Wiatrowski of the inquiry specifies changes to inflation-data collection efforts as well as employment situation surveys.

Alas, as the BLS revealed on Monday, September 22, the delayed release of the Consumer Expenditures report was due to a tabulation discrepancy traceable to a redesign of the questionnaire implemented in 2024 "to reduce respondent burden and improve data quality."

And, as labor economist Guy Berger notes, it's a "very reasonable and completely warranted" explanation. Of course, the BLS probably could have said the very same thing Friday afternoon.

It might have prevented some drama, even perhaps a bit of erosion of public confidence in the integrity of the data government agencies collect, process and disseminate.

And it's hard not to catch a cool drift from the White House, what legal scholars might even describe in "chilling effect" terms.

Trump vs quarterly reporting

The prevailing environment also includes President Trump's suggestion of a major change to the timing and frequency of company reporting to the SEC.

Rather than public companies releasing quarterly reports, Trump suggests semi-annual submissions to the SEC and the market so managers can focus on running their companies and turn down the temperature on earnings season.

"This is exactly backward," writes Ritholtz Wealth Management Chairman and Chief Investment Officer Barry Ritholtz. "In the real world," he adds, "human behavior emphasizes what occurs less often – meaning doing something less frequently gives it an even greater significance than something that becomes routine or common."

Ritholtz suggests twice-a-year earnings reporting will "become overwhelmingly intense" and generate "such focus on it that any company that misses analysts' forecast will find their stock price shellacked."

Bottom line, according to Ritholtz, "This is counterproductive."

Trump's argument resembles one made by Berkshire Hathaway (BRK.B) Chairman and CEO Warren Buffett and JPMorgan Chase (JPM) CEO Jamie Dimon in a 2018 opinion piece for The Wall Street Journal. Buffett and Dimon made a somewhat different point: Public companies should curtail or stop offering earnings guidance.

As Buffett and Dimon wrote, "Our views on quarterly earnings forecasts should not be misconstrued as opposition to quarterly and annual reporting. Transparency about financial and operating results is an essential aspect of U.S. public markets, and we support being open with shareholders about actual financial and operational metrics."

They conclude that "U.S. public companies will continue to provide annual and quarterly reporting that offers a retrospective look at actual performance so that the public, including shareholders and other stakeholders, can reliably assess real progress."

Trump vs the Fed

The environment also includes the president's ongoing effort to impose his will on the Federal Reserve, with his attempt to fire Fed Governor Lisa Cook now a Supreme Court case.

At issue, from the market's perspective, is the ability of the world's most important central bank to conduct monetary policy and set interest rates independent of political influence.

Now that you know why data integrity is at risk, here are some potential ways to position your portfolio.

Short the dollar

If you think all of the change in Washington, D.C. undermines the U.S. role in the global economy, you can short the dollar.

The Invesco DB U.S. Dollar Index Bearish Fund (UDN) tracks the Deutsche Bank Short USD Currency Portfolio Index.

The index uses short U.S. Dollar Index (DXY) futures contracts to replicate being short the dollar against a basket of those six major world currencies.

UDN is a liquid and convenient way to bet against the buck and invest in rising data-integrity risk.

Long Europe

Another way to invest in rising data-integrity risk is to increase your overseas exposure.

Indeed, broad questions about the stability of U.S. institutions is one reason why investing abroad could pay off.

A basket of the best European stocks will do well when the euro is appreciating vs the dollar.

And the euro has appreciated 12.8% this year amid broad and lingering uncertainty about President Trump's tariffs.

Look for expatriates

Buying stocks of U.S.-based companies with significant overseas revenue can provide a "natural hedge" against U.S. dollar risk.

A weaker dollar makes it cheaper for multinational companies to convert foreign profits into U.S. currency. At the same time, a softer buck boosts the competitiveness of exporters' products.

A lot depends on hedging policies as well as geographic exposures. Still, big, familiar multinational companies such as Magnificent 7 stocks Apple (AAPL), Alphabet (GOOGL) and Microsoft (MSFT) generate significant revenue overseas.

Among the best large-cap stocks to buy are global oil and gas exploration and production outfits Chevron (CVX) and Exxon Mobil (XOM). Miners such as Newmont (NEM) and health care companies such as Johnson & Johnson (JNJ) also generate significant overseas revenue.

All are good candidates when it comes to how to invest for rising data-integrity risk.

Be a Gold Bug

Perhaps you think Trump's moves will lead to a historic sell-off where correlations go to one and people sell what they can, when they can.

How to invest for rising data-integrity risk is basically a moot question at this point. Holding physical gold is probably your best bet.

Indeed, as the U.S. dollar has declined from a two-year high in January, what's widely recognized as the world's first medium of exchange and its first investment has made new all-time high after new all-time high.

Low-cost gold ETFs with exposure to the physical metal are an efficient way to provide a hedge with potential upside.

Making America great again, again

Maybe you think too much is made of noisy monthly jobs reports and inflation numbers that not even the Federal Reserve prioritizes.

If you see a lot of sound and fury signifying nothing, from the president and/or market Cassandras, you can go long and/or stay long the U.S.

In fact, the U.S. Dollar Index has declined nearly 12% since hitting an intraday peak of 110.18 on January 13. It's down nearly 10% for the year to date.

Indeed, you might say what's happening in Washington, D.C. is already priced in and the risk now is to the upside.

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Europe’s economy has struggled for years, going back to the fiscal crisis in Greece a decade ago and continuing through the pandemic, war and inflation. Debt continues to bedevil some countries, especially France, which is facing a budget crisis. But look further ahead and there is hope for the European Union’s economies.

The eurozone, the 20-nation currency area that uses the euro, grew at a pace of just 0.1% in the second quarter. More timely data shows that the euro area’s economy remains weak but has so far been able to avoid a contraction in the face of U.S. tariffs. While part of the weakness in recent months reflects payback from an increase in production by European exporters in anticipation of potential U.S. tariffs, underlying growth, including private consumption and investment, also remains sluggish. Higher tariffs are likely to dampen growth in the third quarter, as exporters adjust to the 15% across-the-board duty and as the EU reduces tariffs on U.S. industrial goods.

But growth is likely to pick up in coming quarters. The Purchasing Managers’ Index for the currency bloc and other economic data show steady improvement this year. Meanwhile, the forward-looking components of recent economic surveys point to a further pickup ahead.

Euro area countries engaged in aggressive fiscal cuts after the 2008 global financial crisis. Germany didn’t help matters by enshrining a debt brake in its constitution and limiting structural deficits to just 0.35% of GDP. European economies followed the same pattern during the 2014 euro area crisis, when some of the most heavily indebted countries, including Greece and Italy, went through painful austerity to cut their deficits.

Europe’s prolonged private-sector deleveraging has been another major impediment to growth in recent years because it weakened demand across countries as debt loads needed to be pared down. Weaker banks compounded Europe’s deleveraging woes. In the wake of the global financial crisis, non-performing loans went through the roof and the European Central Bank’s negative interest rates depressed the banking sector’s profitability. By 2013, banks’ return on equity had reached a low of 1%.

After years of painful economic adjustments, the EU is in better shape in important ways. The private sector is now faring much better. Outside of France, the sector’s debt load has fallen from a peak of 110% of GDP to 95%, the lowest level in 17 years. Households and corporations are flush with cash, and debt servicing ratios are healthy across Europe, except in France.

Similarly, European banks have now greatly rebuilt their balance sheets. Non-performing loans are no longer a threat, capital and liquidity ratios are robust and profitability has improved. Given that banks dominate European lending, accounting for about 70% of firms’ borrowing (compared with 25% in the U.S.), a healthier banking sector will help European growth improve and will support capital spending.

The succession of crises in recent years – the pandemic, the war in Ukraine, the energy crisis and more recently trade tensions with the U.S. – has highlighted the need for more fiscal spending, both at the country and the EU level. Germany, the EU’s biggest economy, is spearheading the fiscal shift in Europe. German Chancellor Friedrich Merz has lifted Germany’s debt brake and is embarking on a $1.2 trillion spending spree focused on defense and infrastructure that will boost the broader EU economy.

Meanwhile, political turmoil in France has forced French President Emmanuel Macron to appoint a fifth prime minister in less than two years, making investors question whether the country can find the political consensus to rein in its ballooning budget deficit. Nevertheless, contagion from France’s government bond market to the rest of the euro area will probably be muted and short-lived unless the crisis in France becomes much bigger.

Yields on long-dated German and French government bonds have risen to multiyear highs as investors weigh the impact of rising debt levels and political instability in France. The French, German and Italian 30-year bond yields rose to their highest levels since the euro area crisis. The rise in borrowing costs comes amid concerns that the plans for increased defense spending in Germany will cause public debt to rise at a time when the regional economy is still weak.

Further ahead, the EU has strongly committed to deepening integration and addressing fragmentation. Positive sentiment towards the common currency and the EU is at an all-time high among Europeans after the bloc demonstrated its benefits by its successful handling of the pandemic and energy crisis. The EU also continues its efforts towards a capital market union to make European capital markets deeper and more liquid.

That said, some risks remain for Europe. The political crisis in France could add a layer of uncertainty over the next year to a still-weak economy. Drafting and passing a 2026 budget will become even harder for the French government, delaying fiscal consolidation and potentially worsening France’s debt trajectory. The rise of populist parties fueled by voters’ anger after the recent era of sluggish growth and high immigration also threatens to slow down, or potentially even derail, the EU’s plans for further integration.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Following a recent string of weaker-than-expected jobs data, the central bank cut rates by a quarter-percentage point, as was widely expected.

Wall Street also be tuned into the Fed's release of the Summary of Economic Projections (SEP), or "dot plot," which showed that central bankers expect the federal funds rate to be lower at the end of this year than they forecast in July.

And Federal Reserve Chair Jerome Powell's press conference was also a lively event, though he repeatedly rebuffed efforts to have him comment on politics.

The Kiplinger team reported live on the September Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy.

Best Stocks to Buy for Fed Rate Cuts | How the Federal Reserve Affects Mortgage Rates — and What It Means for Homebuyers in 2025 | Who Will Replace Jerome Powell as Fed Chair?

President Trump's tariff policies are having a moderate impact on inflation

The August Consumer Price Index report showed that President Donald Trump's tariff policies continue to have a moderate impact on price pressures, but the Federal Reserve is still expected to lower the federal funds rate when it meets next week.

According to the Bureau of Labor Statistics, headline CPI was up 0.4% month over month in August, higher than the 0.2% rise seen in July and the 0.3% increase economists expected.

The CPI was 2.9% higher year over year, a quicker pace than the month prior and the largest annual increase since January. Still, the results arrived in line with estimates.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.3% month over month and 3.1% year over year. Both figures matched what was seen in July and were on par with economists' forecasts.

"Despite August's small upside surprise, the reality is that consumer price changes have continued to surprise to the downside (relative to economists' expectations)," says William Blair macro analyst Richard de Chazal, CFA. "We are also only seeing limited pass-through from the tariffs."

Chazal adds that "companies are absorbing some of the costs, as well as passing them further along the supply chains, before they reach the end consumer." So while consumer inflation expectations are higher than the Fed would like, the central bank is more focused on a weakening labor market than a sustained inflation surge, he notes.

- Karee Venema

Related: Hot August CPI Report Doesn't Shift the Rate-Cut Needle: What the Experts Say

A weakening labor market is worrying the Fed

A number of economic reports has the Federal Reserve concerned about the labor market.

Most recently, Thursday's release of weekly jobless claims, which climbed by 27,000 in the week ending September 6, to a seasonally adjusted 263,000. This is the highest level since October 2021.

Bill Adams, chief economist at Comerica Bank, says this particular initial claims update "should be taken with a larger-than-usual grain of salt" given the volatile nature of the data and the fact that the latest update coincided with the Labor Day holiday and the start of the school year.

"Even so," he notes, "after the downward revisions to payrolls announced earlier this week and the weak jobs report for August last week, the job market is looking the wobbliest since the pandemic."

As for that August jobs report, the Labor Department recently said that nonfarm payrolls rose by 22,000 in August, missing economists' estimate for 75,000 new jobs. Figures for June were revised down by 27,000, from adding 14,000 to losing 13,000, while July job growth was upwardly revised by 6,000 (from 73,000 to 79,000 additions).

With these revisions, the U.S. added 21,000 fewer jobs in June and July than previously reported.

The unemployment rate, which is calculated from a separate survey, ticked up to 4.3% from 4.2%.

The data "underlines the growing downside risks to the labor market," says Simon Dangoor, head of Fixed Income Macro Strategies at Goldman Sachs Asset Management. "Hiring is running close to stall speed, and the breadth of jobs gains remains poor."

Dangoor adds that while slowing supply growth – due in part to reduced immigration – "is mitigating upward pressure on the unemployment rate, the Fed is acutely aware that a low-demand, low-supply equilibrium is fragile and vulnerable to deterioration."

- Karee Venema

Fed meeting schedule for 2025

The next Fed meeting, which runs from September 17 to 18, marks the sixth gathering of 2025. That means there are two more to go after that.

"The committee meets eight times a year, or about once every six weeks," writes Kiplinger contributor Dan Burrows in his feature, "When Is the Next Fed Meeting?".

The Federal Open Market Committee "is required to meet at least four times a year and may convene additional meetings if necessary," Burrows adds, noting that "the convention of meeting eight times per year dates back to the market stresses of 1981."

Fed meetings last two days and wrap up with the release of a policy decision at 2 pm Eastern Standard Time. This is typically followed by the Fed chair's press conference at 2:30 pm.

Here is the full Fed meeting schedule for 2025:

January 28 to 29

March 18 to 19

May 6 to 7

June 17 to 18

July 29 to 30

September 16 to 17

October 28 to 29

December 9 to 10

Some good news on the inflation front?

This week also brought an encouraging reading on wholesale inflation. Ahead of Wednesday's open, the Bureau of Labor Statistics said the Producer Price Index (PPI), which measures what businesses are paying suppliers for goods, fell 0.1% from July to August – coming in below economists' estimates for a 0.3% rise. Year over year, PPI was up 2.6%.

"The better-than-expected and relatively benign producer price report is both good news and bad news," says Scott Helfstein, head of investment strategy at Global X. "On the positive side, tariffs are not having a drastic impact on company supply chains in aggregate. Alternatively, the slowing in producer inflation could also signal a softening economy."

He goes on to say that inflationary pressures are not impacting producers right now and input costs appear to be contained. And the areas that did see increases in goods pricing were tied to the consumer staples sector, including food, tobacco and certain electronics segments.

"There were a few catalysts for higher prices in services with transportation costs and apparel being notable standouts," Helfstein says.

While he notes that the Fed is likely to take notice of the data, it will not shift the odds for a rate cut next week.

- Karee Venema

Fed rate cut incoming

Weak job gains during July and August, plus a forthcoming revision that lowers employment numbers going back to April of last year, will change the Fed's default position from one of standing pat to one of cutting short-term interest rates a quarter point at a time, starting with next week's policy meeting on September 17.

Inflation is still higher than the Fed would like, but Chair Powell has emphasized that the Fed has a dual mandate from Congress: not just to maintain low inflation, but a good economy as well. At the moment, it looks like the latter has become a greater concern than the former, and thus is the priority.

- David Payne

The smartest places to keep your cash when rates drop

The Kiplinger personal finance team is of course always following trends in savings vehicles, looking for opportunities and strategies for our readers. With an expected rate cut after months of stasis, this is a key time to get your cash in order. Even if you're not actively saving up, chances are you have spare funds to store that you don't necessarily want to put into the stock market, whether it's because you're holding it for a house project, vacation or emergency fund, or just don't like risk in your portfolio.

Personal finance writer Sean Jackson has been beating the drum for CDs in the lead-up to this September Fed meeting. With a CD, you lock in a rate for its entire lifetime, meaning that even if savings rates drop after the meeting, your CD rate will remain the same. In this article, he shares the best CDs he's found this week — as well as his advice on where not to put your cash.

Read more: The Smartest Places to Keep Your Cash If Rates Drop in 2025

- Alexandra Svokos, digital managing editor

Miran could be confirmed to the Fed board as soon as Monday

The Senate could vote to add Stephen Miran, a White House economic adviser, to the Federal Reserve's Board of Governors as soon as Monday, according to some media reports.

President Trump tapped Miran to fill the seat vacated by Adriana Kugler, who unexpectedly resigned last month.

By a vote of 13-11 along party lines, the Senate Banking Committee on Wednesday advanced Miran's nomination to the Senate floor. Republicans are rushing to get Miran confirmed ahead of the start of the Fed's September meeting.

If confirmed, Miran will serve out the remainder of Kugler's term, which is set to expire on January 31, 2026.

- Karee Venema

How well do you know the Fed?

Fed meetings have become key events on Wall Street after inflation hit a pandemic-induced 40-year peak in 2022 – which forced the central bank into an aggressive rate-hiking campaign that lifted the federal funds rate to its highest level in more than two decades.

But how well do you know the Fed?

With the next Fed meeting on deck, we decided to test your basic knowledge of the Federal Reserve and how its actions impact you and your money.

Quiz: How Well Do You Know the Fed?

Keep an eye on Powell's presser and the FOMC's quarterly forecasts

Looking beyond the FOMC's September 17 policy announcement, Chair Powell's post-meeting press conference and the accompanying new policy committee forecasts may give clues as to whether the members consider the labor market slowdown to be the result of a weakening economy or caused more by immigration tightening and deportations. FOMC members would be more likely to cut more frequently if it were a result of a weakening economy.

It will also be interesting to see whether members consider the higher inflation as temporary, linked to tariffs, or in danger of becoming more sticky as consumer, worker and business expectations shift. Members would also be more likely to cut if they feel it's temporary.

- David Payne

Consumer sentiment slips in September

The University of Michigan on Friday said its Consumer Sentiment Index fell 4.8% from August to September, to 55.4. The index is down 21% year over year.

"This month’s easing in economic views was particularly strong among lower and middle income consumers," says Surveys of Consumers Director Joanne Hsu. "Consumers continue to note multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets, and inflation."

She adds that while several consumers mentioned tariffs during interviews, sentiment remains above the lows seen in April and May after the Trump administration announced reciprocal tariffs.

The report also showed that year-ahead inflation expectations were unchanged from August, at 4.8%, while long-run inflation expectations ticked up to 3.9%.

"Consumers are becoming even more pessimistic about the economy," says Bill Adams, chief economist at Comerica. "There's still some time until the start of the holiday spending season, but the setup looks disappointing for consumer-facing businesses as of today."

As for the Fed, Adams points out that it is being "pulled in opposite directions" by rising inflation and a weak labor market. "Chair Powell signaled at his speech to the Jackson Hole monetary policy conference that he favored 'careful' adjustments of interest rates given those competing pressures."

Comerica, he adds, expects a quarter-point rate cut this Wednesday. And while "the Fed can be expected to cut rates further in coming months; the question is how much, not if," the economist says. "If Powell reiterates the 'proceed carefully' language he used at Jackson Hole in the post-meeting press conference, it will signal that he favors a pause in rate cuts at the October decision (barring further deterioration in the economic data)."

Adams notes that it "will be worth watching for a gap between the FOMC statement's guidance, which represents the consensus view of all FOMC members, and Chair Powell's own statements in the press conference, which reflect his personal view."

- Karee Venema

Stocks closed mixed ahead of Fed week, notch weekly gains

The main indexes closed mixed Friday. While the Nasdaq Composite (+0.4% at 22,141) managed to notch a new record high, the S&P 500 (-0.05% at 6,584) and the Dow Jones Industrial Average (-0.6% at 45,384) were not so resilient.

It was a strong week overall for the U.S. stock market, though, with the Nasdaq, S&P 500 and Dow adding between 1% and 2%.

- Karee Venema

Read more: S&P 500 Slips Ahead of Fed Week: Stock Market Today

What will the dot plot reveal?

It's all but certain that the Fed will cut interest rates this time around. This meeting will also include the release of the central bank's Summary of Economic Projections (SEP), or "dot plot," which summarizes where each member expects monetary policy to be going forward.

In June, the Fed's dot plot indicated expectations that the federal funds rate would be lowered to 3.9% by the end of 2025 – suggesting two quarter-point rate cuts this year.

But following several data points – including the August jobs report – that showed a notable slowdown in the labor market, many are expecting the Fed to cut at each of its three remaining meetings.

The June SEP also implied expectations for slightly slower economic growth, higher unemployment and an uptick in inflation compared to what was forecast in March.

Barclays economists think the SEP will "show little change in economic projections, other than upward revisions to real GDP growth and a small downward revision to 2025 inflation."

However, they expect "the median dots to show three 25 basis-point cuts this year, to 3.6%, one cut in 2026 and one in 2027, as well as an unchanged longer-run dot at 3.0%."

- Karee Venema

When does Jerome Powell's term as Fed chair end?

President Trump has not been subtle in his dislike of Fed Chair Powell. But the question of whether or not Trump can fire Powell is seemingly moot given that his term as Fed chair is up in less than a year from now – on May 15, 2026.

It's unlikely that those in Trump's inner circle will encourage him to disrupt the status quo and replace Powell before his term is over – which could potentially send stocks and bonds tumbling – given that there's such a small amount of time left.

Earlier this month, Treasury Secretary Scott Bessent began meeting with potential replacements for Chair Powell, including former Fed officials Lawrence Lindsey, Kevin Warsh and James Bullard.

For what it's worth, Powell's term as a member of the Board of Governors of the Federal Reserve ends on January 31, 2028.

- Karee Venema

A jumbo rate cut in September is unlikely

The odds of a jumbo rate cut have risen over the past month or so amid signs of weakening in the labor market.

According to CME FedWatch, the probability of a 50 basis-point rate cut is currently at 6.6%, up from 5.7% a month ago and zero before that.

But Jonathan Millar, senior U.S. economist at Barclays, says that it's doubtful the FOMC will lower the federal funds rate by a half-percentage point.

"Incoming data portray a slowed labor market that is not collapsing, and still-gradual upward price pressures from tariffs," Millar writes in a note. "Even with Stephen Miran likely injecting a dovish voice next week, the Fed seems on course for sequential 25 basis-point rate cuts through end-2025, with jumbo cuts unlikely."

- Karee Venema

CPI release dates for the remainder of 2025

The Consumer Price Index (CPI) report for August was released the morning of Thursday, September 11, giving the Federal Reserve the last look at inflation ahead of its September meeting.

The next CPI report, which will show data for September, will be released ahead of the open on Wednesday, October 15.

The CPI for October will be released on Thursday, November 13, while the final CPI release date in 2025 – for November's data – is on Wednesday, December 10.

You can access the full calendar for CPI report release dates at the Bureau of Labor Statistics.

- Karee Venema

Wells Fargo economists expect a quarter-point rate cut

Wells Fargo senior economists Sarah House and Michael Pugliese are among those anticipating a quarter-point rate cut Wednesday afternoon.

"A more precarious picture of the labor market has become apparent since the FOMC last met in July," the two wrote in a recent note, though adding that the unemployment rate (4.3%) is "at the top end of the FOMC's range consistent with 'full employment.'"

House and Pugliese note that "policy easing this year has been delayed due to inflation. Reflation in the goods sector alongside slower services disinflation has kept core PCE running about one percentage point above the 2% target."

However, they add that "the outlook for inflation has been little changed over the past six weeks."

What the economists don't anticipate is for Powell & Co. to signal any additional rate cuts beyond September so that the committee can maintain "flexibility to reduce the policy rate again at its next meeting on October 29 or proceed with additional easing more slowly."

- Karee Venema

What time will the Fed statement be released and what changes are expected?

The Federal Open Market Committee will release its updated policy statement at 2 pm Eastern Standard Time on Wednesday, September 17.

"Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year," the committee wrote in its July statement. "The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated."

This time around, Deutsche Bank economists expect the statement to "reflect the risk management concerns around the labor side of their dual mandate flagged by Chair Powell at Jackson Hole."

As such, they anticipate changes to the opening paragraph to note that job gains have slowed and the unemployment rate, while still low, has moved up. "This would be a clear downgrade from the July meeting statement's characterization of labor market conditions as 'solid.'"

The group will also be watching for potential dissents from committee members. "We expect Stephen Miran, who appears set to be approved by the Senate next week before the meeting, to dissent in support of a 50 basis-point reduction," they write in a note to clients, adding that Governors Bowman and Waller could also issue dovish dissents.

"There could also be hawkish dissents to a 25 basis-point rate cut," they add, potentially from Kansas City Fed President Jeffrey Schmid and/or Chicago Fed President Austan Goolsbee.

- Karee Venema

August retail sales data will be released on Tuesday

While the September Fed meeting is the main event on this week's economic calendar, Wall Street will also be tuned into Tuesday morning's release of the August retail sales report.

The data give investors and economists an important look at inflation and consumers' ability and willingness to spend money.

"Total retail sales (excluding restaurants) rose a strong 0.7% in July, while core retail sales (which also exclude gas and autos) picked up by a moderate 0.3%," writes Kiplinger staff economist David Payne in the Kiplinger Retail Outlook. "The four-day Amazon Prime Day promotion in July likely boosted consumer spending. The underlying trend would have been weaker without the sale."

For August, BofA Securities economist Aditya Bhave expects retail sales to come in strong, "which should keep alive the conundrum of solid spending and weak labor data."

Bhave cites solid credit card data, which showed that "spending growth was broad-based across sectors, and favorable seasonal factors."

The economist expects "a solid +0.7% and +0.8% for retail sales ex-autos and the control group."

- Karee Venema

Waiting for a cut

The main U.S. stock market indexes are poised to rally at the start of Fed Week, with futures in the green across the board 30 minutes before the opening bell at the New York Stock Exchange.

The Nasdaq Composite closed at an all-time high Friday, and though the S&P 500 and the Dow Jones Industrial Average were down at the end of last week they're still hovering near their own recent fresh peaks.

According to CME FedWatch, the probability the Fed cuts the target range for the federal funds rate by 25 basis points is 96.4%, up from 89.4% a week ago. Odds of a double cut have moved to 3.6% from 10.6% last Monday.

But the probability of a 50-basis-point move was 0.0% a month ago. And President Donald Trump has put his thumb on the scale in favor of taking the target range for the fed funds rate to 3.75% to 4.00%.

"I think you have a big cut," President Trump told reporters Sunday. "It's perfect for cutting." Trump has been pressuring Fed Chair Jerome Powell to cut interest rates for months.

The president is not alone, though. Renaissance Macro Research Head of Economics Neil Dutta thinks a double-cut is warranted too.

"I think it's going to be very, very challenging for the Fed to deliver what's embedded in market pricing," Dutta explains. "The market thinks the Fed is going to be at neutral two years before the Fed itself sees itself at neutral."

By "neutral" Dutta means the "neutral interest rate," the theoretical level for the federal funds rate that neither stimulates nor restricts economic growth while supporting price stability and full employment.

– David Dittman

It's a big week for central banks and interest rates

"Policymakers have shown a clear bias to ease policy further, but were waiting for the data to justify a move. The August employment report was likely enough to satisfy that need, even as inflation remains well above target." Sounds about right, seems reasonable ahead of the next Fed meeting…

And if you're tracking the multitude of central banks meeting this week to discuss monetary policy, you have your forecast for the Bank of Canada from BMO Capital Markets Canadian Rates & Macro Strategist Benjamin Reitzes.

Like the Federal Open Market Committee, Canada's central bank is expected to announce an interest rate cut, only earlier on Wednesday, at 9:45 am Eastern Standard Time.

"The Bank of Canada is expected to cut policy rates 25 basis points to 2.50% on September 17 after staying on hold at the prior three meetings," Reitzes writes.

The Bank of England is scheduled to announce its next policy move at 7 am EST Thursday morning. The BoE is expected to hold rates steady.

The Bank of Japan is also expected to keep its current policy rate in place at the conclusion of its meeting this week.

The BoJ does not have a fixed schedule but usually announces interest rate decisions around midday local time, or between 10:45 pm and 12 midnight EST. The market expects its next move to be a hike.

The BoJ will close out an active week during which policy rates for four of the Group of Seven industrialized nations, five of the 10 most-traded currencies in the world and approximately 40% of the global economy will be set.

North American monetary policymakers confront similar circumstances, as Reitzes explains, including "ongoing elevated uncertainty around the outlook for the economy and inflation" as well as "deteriorating labour market" conditions.

You can apply his conclusion to Fed Chair Powell press conference too: "Listen to the tone from Governor Macklem to assess whether the Bank is keen on cutting in back-to-back meetings and for any clue on how stimulative they’d like policy to be."

– David Dittman

President Trump is still trying to fire Fed Governor Cook

President Donald Trump has appealed a ruling by a lower court to impose an injunction that prevents him from removing Lisa Cook from the Federal Reserve Board of Governors for the time being. He still wants to fill a voting spot on the FOMC before the next Fed meeting.

A decision from the U.S. Court of Appeals for the D.C. Circuit is expected on Monday. Cook has challenged Trump's attempt to fire her over allegations of mortgage fraud.

U.S. District Court Judge Jia Cobb ruled last week that claims by Federal Housing Finance Agency Director Bill Pulte and referred to U.S. Attorney General Pam Bondi is not "cause" sufficient to justify Cook's removal under U.S. law.

"The public and the Executive share an interest in ensuring the integrity of the Federal Reserve, and that requires respecting the President’s statutory authority to remove Governors 'for cause' when such cause arises," lawyers for the White House argue in their brief.

According to Cook's brief, the Fed governor's removal would "mark an immediate end" to central bank independence from the executive branch and "send a destabilizing signal to the financial markets that could not be easily undone."

Markets are broadly higher as of midday, with the Nasdaq Composite and the S&P 500 firmly in positive territory but the Dow Jones Industrial Average held under by a few big names.

The yield on the 2-year U.S. Treasury note, a basic indicator for the short-term direction of Fed policy, was down to 3.535% from 3.558% Friday. The yield on the 30-year U.S. Treasury bond, considered a bigger-picture barometer, was down to 4.645% from 4.679%.

– David Dittman

Will Stephen Miran serve at the Fed (and in the White House)?

The Senate could confirm Stephen Miran's nomination to serve on the Federal Reserve Board of Governors as early as today.

President Trump nominated Miran, currently the chairman of the Council of Economic Advisers, to complete the term of former Fed Governor Adriana Kugler. Kugler left before the January expiration of her 14-year term to return to a teaching post at Georgetown University.

Miran has been a key voice in the White House during the topsy-turvy rollout of President Trump's tariffs. Miran said that, if confirmed to serve on the Fed board, he would take an unpaid leave of absence from his role as a White House economic adviser.

During his confirmation hearing, Sen. Jack Reed of Rhode Island asked Miran whether he would resign from the Council of Economic Advisers if he's confirmed as a Fed governor.

"I have received advice from counsel that what is required is an unpaid leave of absence from the Council of Economic Advisers," Miran said. "And so, considering the term for which I'm being nominated is a little bit more than four months, that is what I will be taking."

– David Dittman

How Powell and the market see the employment situation

The August jobs report is what caused the odds of a jumbo 50-basis-point move on interest rates at the next Fed meeting to jump off zero to above 10% as recently as last Monday.

That probability has settled down to 4.0%, even after major downward revisions to recent jobs growth data.

The big question is how Fed Chair Jerome Powell and his colleagues on the Federal Open Market Committee see the employment situation right now. But, also, where is inflation going from here? And, bottom line, what does all of it mean for the federal funds rate?

Still, despite the fact that we just saw the biggest revision to jobs data ever, 911,000 fewer new jobs were created from April 2024 through March 2025, and there are now more unemployed people than job openings, as Ritholtz Wealth Management Director of Institutional Asset Management Ben Carlson notes, the S&P 500 made three new all-time highs last week.

The broad-based index has made 24 new highs this year and 43 over the trailing 12 months. "The stock market doesn't care about the labor market… yet," Carlson notes.

Indeed, BMO Capital Markets Chief Investment Strategist Brian Belski broke down 10 rate-cutting cycles since 1982, "when the Fed started officially announcing its policy actions."

According to Belski's analysis, the S&P 500 posted positive returns over the 12 months after a resumption of rate cuts in eight of the 10 cycles, with an average gain of 10.4%.

Belski has a big "however":

[T]he macro context behind the moves mattered a great deal, which is why performance varied so significantly around these turning points ranging from -23.9% to 32.1%. In cycles where rate cuts were able to prolong economic expansion and keep corporate earnings on an upward trend, stocks performed quite well. However, in cycles where monetary stimulus was unable to prevent an economic downturn (i.e., 2001 and 2007), stocks recorded significant losses in the following year as earnings growth struggled.

As Sam Ro of TKer says, "Yes, the Fed can have an impact on economic activity. But what ultimately matters for markets is where the economy and corporate earnings head."

– David Dittman

It's a risk-on start to Fed Week

All three main U.S. equity indexes closed higher Monday, with the tech-heavy Nasdaq Composite leading the way and hitting a new all-time closing high.

The broad-based S&P 500 also hit a new closing high, and the Dow Jones Industrial Average – the last of the three to start hitting fresh peaks this year – rallied late to post a modest gain.

The yield on the 2-year U.S. Treasury note ticked down to 3.539% from 3.558% on Friday. The yield on the 30-year U.S. Treasury bond was down to 4.658% from 4.679%.

The Cboe Volatility Index (VIX) popped in percentage terms – rising more than 6% – but the "fear gauge" remains well within its "normal" range between 12 and 20.

"Lingering concerns about whether the Fed would cut rates eased last week when the spike in jobless claims highlighted a softening labor market," observes E*TRADE Managing Director Chris Larkin. "Now the discussion will turn to how aggressively the Fed will act."

Larkin says the market "may take its near-term cues from Chairman Powell’s press conference" amid mixed incoming inflation data. Also, he adds, "The Fed may remind everyone that it may be focused on jobs now, but it hasn’t forgotten about the other half of its mandate."

– David Dittman

Miran, Cook to vote at September Fed meeting

The Senate on Monday confirmed Stephen Miran as the newest member of the Federal Reserve's Board of Governors, replacing Adriana Kugler, who resigned in August.

This means Miran will participate in the September Fed meeting, which kicks off today.

Fed Governor Lisa Cook will also be at the table after an appeals court on Monday denied the White House's eleventh-hour efforts to fire her over allegations of mortgage fraud.

Both Miran and Cook will vote on monetary policy, too.

The FOMC has 12 total members, eight permanent and four who rotate each year. The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed. Four regional Fed presidents are rotated in each calendar year.

The 2025 FOMC voting committee consists of:

• Fed Chair Jerome Powell
• Vice Chair Philip Jefferson
• Fed Governor Michael Barr
• Fed Governor Michelle Bowman
• Fed Governor Lisa Cook
• Fed Governor Stephen Miran
• Fed Governor Christopher Waller
• New York Fed President John Williams
• Boston Fed President Susan Collins
• Chicago Fed President Austan Goolsbee
• St. Louis Fed President Alberto Musalem
• Kansas City Fed President Jeffrey Schmid

In 2026, the presidents from Cleveland, Philadelphia, Dallas and Minneapolis will rotate in as FOMC voting members, according to the Federal Reserve.

- Karee Venema

Consumer spending stayed strong in August

Data released Tuesday morning showed that consumer spending remains strong.

According to the Census Bureau, retail sales rose 0.6% from July to August, while July's figure was upwardly revised to 0.6% from the initial reading of 0.5%.

Consumers were busy shopping online and going out to eat, which helped boost the headline number for August, while car sales also provided a lift.

"The U.S. economy is still humming. The August retail sales report proved that the strength of the mighty consumer cannot be easily discounted," says Priscilla Thiagamoorthy, senior economist at BMO Capital Markets. "So far, there has been little evidence that tariffs or softer labor market conditions are weighing on demand."

Thiagamoorthy adds that U.S. households, which represent the biggest pillar of the economy, "are still holding up thanks to healthy balance sheets sporting record-high household net worth."

- Karee Venema

Industrial production ticked higher in August

Data from the Federal Reserve showed that industrial production increased by 0.1% from July to August, beating economists' forecast for a 0.1% decline.

"In isolation, that headline print may sound encouraging, but taken in the context of a sharp downward revision that took July's decline from a small 0.1% to a more disconcerting 0.4%, this latest report puts overall output lower than where we thought we were in July," say Wells Fargo economists Shannon Grein and Tim Quinlan.

One bright spot the two economists point to is manufacturing output, which represents the largest industry group and was up by 0.2% in August after falling 0.4% in July. This was due to a 2.6% rise in the production of motor vehicles and parts.

But even with this "modest pickup in manufacturing activity" in recent months, Grein and Quinlan are still cautious as overall activity remains constrained amid continued uncertainty.

"While tariff rates haven't moved all that much in recent weeks, the administration looks to still be fine-tuning trade policy between different country-specific trade deals and product-specific tariffs that are still on the table," they say. And while the Fed is set to resume its rate-cutting cycle tomorrow, the economists "expect borrowing costs to settle relatively elevated."

As such, the pair note that it will likely be "some time yet before we see a broadening out in manufacturing activity."

- Karee Venema

How will rate cuts impact cryptocurrency prices?

With a rate cut all but certain to be announced tomorrow afternoon, the real question now becomes "by how much" and "whether Powell leaves the door open for a faster pace of easing," says Matt Mena, crypto research strategist at 21Shares.

CME Group FedWatch currently has the probability of a half-percentage point cut at 4%, while Polymarket puts the odds closer to 8%, Mena notes. While low, the strategist reminds us that the Fed has surprised before and "has shown a willingness to pivot faster when conditions demand it."

With market participants already in risk-on mode – as evidenced by a stock market at record highs and bitcoin prices back near $115,000 – a more dovish tilt by the Fed, either through a surprise 50 basis-point cut or a dot plot that signals more easing than anticipated, "could force a repricing of the entire curve and set the stage for bitcoin to challenge new highs into year-end," Mena says.

- Karee Venema

Powell and his purple ties

The odds of a September rate cut are high. It's also a safe bet that Fed Chair Powell will be wearing a purple tie during tomorrow's press conference.

That's because Powell always wears a purple tie … and there's a reason for it.

During an early April Q&A session with journalists at the Society for Advancing Business Editing and Writing conference, Powell was asked about the significance of his purple ties.

"At the beginning, the only significance was that I like purple ties," Powell replied. At his next press conference, he said he went to reach for a red or blue tie and thought, "Maybe not … so I wind up wearing purple."

He said now it's become "a thing," and it supports the fact that the Fed "is strictly non-political" and "bipartisan," and purple is a good color for that.

"Plus, I like purple ties," Powell concluded.

- Karee Venema

Wednesday will mark the start of the Fed's gradual easing, says FHN Financial senior economist

Sophia Kearney-Lederman, senior economist at FHN Financial, is among those who expect a quarter-percentage-point rate cut at this week's Fed meeting, which will bring the federal funds rate to a range of 4.0% to 4.25%.

"We anticipate this will be the start of gradual easing as the Fed navigates from restrictive policy to more neutral policy," Kearney-Lederman wrote in emailed commentary. "Many on the FOMC have acknowledged that rates are currently restrictive, though by how much is what will determine how many more cuts come after the September meeting."

The economist admits that "the Fed is in a tricky place as they head toward easing," given that risks to inflation are "tilted to the upside" and risks to the labor market are "leaning to the downside."

While some committee members, such as Governors Waller and Bowman, believe the impact of tariffs on inflation "will be a one-time effect," others, including St. Louis Fed President Musalem, seem concerned the impact will be more lasting, Kearney-Lederman says.

"At the September meeting, we expect there will be discussion around not only whether the Fed should cut rates or not, but also whether that cut should be 25 basis points or 50 basis points," she adds. "Beyond the interest rate decision that will be made this week, the committee will also release an updated Summary of Economic Projections showing updates to participants' projections for growth, inflation, unemployment and the fed funds rate. The dot plot will be something to watch."

With two remaining meetings left in 2025 – in October and December – the dot plot "will indicate how much more easing individuals project this year," Kearney-Lederman says.

- Karee Venema

Stocks slip ahead of Fed Day

The main U.S. equity indexes traded lower Tuesday but remained near all-time highs. At the closing bell on Fed Day Eve, the tech-heavy Nasdaq Composite was off 0.1% at 22,334, the broad-based S&P 500 had slipped 0.1% to 6,066, and the blue-chip Dow Jones Industrial Average was down 0.3% to 45,757.

Over in the bond market, the 2-year Treasury yield fell 2.5 basis points to 3.51%, while the yield on the 10-year Treasury edged down 0.4 basis point to 4.03%.

- David Dittman

Read more: Markets Are Quiet Ahead of Fed Day: Stock Market Today

Stock futures little changed ahead of Fed announcement

Stock futures are holding steady ahead of this afternoon's policy announcement from the Federal Reserve.

At last check, futures on the Dow Jones Industrial Average were slightly higher (+0.05%), while those on the S&P 500 (-0.06%) and Nasdaq (-0.08%) were marginally lower.

As for individual stocks, Nvidia (NVDA) shares are down more than 1% in pre-market trading after a report in the Financial Times suggested China has banned its biggest tech companies from buying the firm's AI chips.

Baidu (BIDU) and Netflix (NFLX) are poised for higher opens after receiving upgrades from Arete Research Services and Loop Capital, respectively.

Housing starts plunged in August

Data from the Census Bureau showed that building permits fell 3.7% from July to August, to a seasonally adjusted rate of 1.31 million. Housing starts plunged 8.5% month over month to 1.307 million units.

"Fed rate relief and lower mortgage rates can't come soon enough for the struggling U.S. housing market," says Sal Guatieri, senior economist at BMO Capital Markets. "Both singles and multiple-family units cratered in the month. And, by the looks of building permits and the latest NAHB Housing Market Index, little recovery is expected in September."

Guatieri points to lofty mortgage rates, a weak labor market and declining home values as reasons for depressed demand, while deported construction workers and higher lumber costs have impeded supply.

"If there are any dissenters favoring a large rate cut at today's FOMC meeting, the depressed housing market will likely be one motivating factor alongside a weakening jobs market," the economist notes.

- Karee Venema

StubHub IPO makes for a busy afternoon on Wall Street

The September Fed meeting isn't the only thing Wall Street is watching today. Online ticket marketplace StubHub is expected to start trading on the New York Stock Exchange under the ticker symbol "STUB" this afternoon.

The company priced its IPO last night at $23.50 per share, raising roughly $800 million in its offering.

The StubHub IPO is taking advantage of this summer's resurgence of public offerings, which was sparked by "clarity on trade policy, a summer rally in growth stocks, and the prospect of rate cuts," according to Renaissance Capital.

"Heading into the fall season, we expect the fastest pace of deal activity since 2021, as more companies accelerate listing plans amid the current momentum," the IPO experts say in their fall 2025 U.S. IPO preview (PDF).

- Karee Venema

Read more: StubHub IPO: Should You Buy STUB Stock?

Stocks are choppy ahead of the Fed

The main market indexes are making modest moves ahead of this afternoon's policy announcement from the Fed and subsequent press conference from Chair Powell.

At midday, the S&P 500 is down 0.1% and the Nasdaq Composite is 0.5% lower. The Dow Jones Industrial Average is outperforming, up 0.6% at last check.

Walmart (WMT) is the best Dow Jones stock so far today, up 2.6% after BofA Securities analyst Robert F. Ohmes reiterated his Buy rating on the mega-retailer and lifted his price target to $125 from $120.

Ohmes said Walmart's AI agent is testing well and will start taking action over the next few weeks or months, versus just answering questions as it does now.

"While the development of the market is still in very early stages, we see WMT as well positioned to be a leader in 'top of funnel' agentic AI commerce given its impressive scale, ability to serve customers both on & offline, unmatched data from 180 million customers and high potential for partnerships with some of the leading LLMs we believe WMT already frequently engages with," Ohmes wrote in a note to clients.

- Karee Venema

One way rate cuts can help extend the stock market rally

It's been an impressive year for the stock market, with the Dow up more than 8%, the S&P 500 12% higher, and the Nasdaq leading with its 15% advance.

These returns are even more impressive considering stocks were teetering near bear-market territory this spring. Indeed, since their April lows, the three main indexes have gained between 22% and 45%.

LPL Financial Chief Equity Strategist Jeff Buchbinder notes that the surge off the spring nadir has been driven by "strong corporate profits, fiscal policy, and a resilient economy," and that "potential rate cuts could be a necessary catalyst for stocks to extend their rally."

Buchbinder says that rate cuts have historically been stimulative for stocks absent a recession. He also points to assets in money market funds, which have been on the rise in 2022, as providing longer-term tailwinds for the stock market.

"The meaningful move lower in rates currently priced in would shift the arithmetic around money market funds, diminishing earnings and potentially leading investors to redeploy capital – ending the unusual trend of money market assets rising alongside equity prices," the strategist explains.

He adds that, historically, increases in the market cap of the broader U.S. equity market correlate with declining or stable levels of money market fund assets, but this "has not been the case since 2022 due to the Fed's rate hiking cycle and 'higher-for-longer' stance, which increased the attractiveness of money market funds."

While Buchbinder admits that it may take a few rate cuts to redeploy cash from money market funds to the stock market, the September Fed meeting "could be an early domino to fall in igniting additional support for the bull market."

- Karee Venema

The Fed decision is in

The Fed decision is in. The central bank cut rates by a quarter-percentage point, as expected.

The only dissent from today's quarter-point cut was newly appointed Stephen Miran, who preferred a half-point cut.

- David Payne

FOMC members expect more rate cuts than in June

The Summary of Economic Projections show the Fed's Board of Governors and regional presidents expect a faster decline of short-term interest rates than what was published in the June SEP.

And there's a difference of opinion among survey participants: about half expect quarter-point cuts at the October and December meetings, and half don't.

- David Payne

Committee members "scattered" on future rate cuts

A plurality of committee members expect two or more cuts to the federal funds rate in 2026 and 2027, but only by about a percentage point's worth from the current range of 4.0% to 4.25%.

Survey participants are very scattered when it comes to looking 12 to 24 months down the road.

- David Payne

Where can I watch Fed Chair Powell's press conference?

Fed Chair Jerome Powell's press conference will begin at 2:30 pm Eastern Standard Time.

The presser can be viewed on the Federal Reserve's website or on the Fed's YouTube channel.

What changed in the September FOMC statement?

Changes to the FOMC's latest policy statement include the following:

Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated. (Previously read: Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.)

The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen. (Previously read: The Committee is attentive to the risks to both sides of its dual mandate.)

In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4‑1/4 percent. (Previously read: In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent.)

- Karee Venema

The path of least resistance for stocks is higher from here, says HB Wealth

"The Fed's decision to cut its key rate today reflects its belief that a softening labor market is a bigger economic risk than potential future inflationary pressures from tariffs that have yet to materialize," says Ross Bramwell, CFA, managing director of Investment Communications, Shareholder, at HB Wealth. "Although the prices of goods are rising in many areas of the market, and services inflation remains sticky, with a moderately growing economy, consumer spending and corporate earnings have shown resiliency despite sticky inflation."

He adds that the recent increase in initial and continuing unemployment claims is the biggest risk to consumer spending and corporate earnings at the moment, though it's a moderate one. "Employed consumers tend to spend, and that narrative remains intact."

Bramwell notes that markets are likely to view this initial rate cut as a move by the Fed to normalize rates rather than one that was required to stimulate or support the economy.

"Consequently, the direction of least resistance will likely be higher for stocks going into year-end," he says. "While the labor market has softened, it remains balanced as hiring and firing have stalled, and not near recessionary levels. Consumer spending data this week reinforced that the U.S. consumer in aggregate continues to spend, which should support earnings into early 2026."

- Karee Venema

Powell cites labor market weakening as the main reason for today's rate cut

The main reason for today's rate cut, according to Chair Powell, is the slowdown in the labor market, as expected. Job gains are not enough to prevent the unemployment rate from rising further. Even though inflation has picked up, this takes precedence.

- David Payne

Powell talks risks to the labor market

"There's very little growth, if any, in the supply of workers," Powell noted, when asked about risks to the labor market. Employers' demand for labor is also down a lot, leading to an usual balance in the labor market, with scant job growth in recent months.

Powell emphasized that the Fed is still guarding against inflation, but it is coming to see downside risk to the labor market as a growing concern that merited today's quarter-point rate cut. However, he emphasized that there was little appetite among his colleagues for a larger reduction in rates at this meeting.

- Jim Patterson

Mortgage rates are already lower

While many people hope a rate cut will lead to drops in offered mortgage rates, mortgage rates are determined by several factors, including the 10-year Treasury. In the lead-up to this Fed meeting, average mortgage rates had already dipped to 2025 lows.

Lower mortgage rates can open up opportunities for both prospective homebuyers as well as homeowners looking to refinance.

Read more: Mortgage Rates Dip to Year-Low as Jobs Data Disappoints

- Alexandra Svokos

How will the Fed respond to a potential surge in inflation?

Asked how the Fed will respond if inflation accelerates significantly, Powell said that for now, the central bank expects a near-term bump in inflation due to the recently imposed tariffs, but not a long-run increase.

Assuming that pans out, he said that he and his colleagues felt that the Fed can pivot to providing more support to the economy, particularly the weakening labor market, by lowering its benchmark interest rate. That could prove risky if inflation pressures prove more persistent than the Fed is forecasting.

He admitted that it's a challenge when the Fed has to choose between the opposing goals of curbing inflation and boosting the economy. No doubt he is hoping the Fed does not find itself in that position down the road.

- Jim Patterson

"There's no risk-free path" from here, Powell says

"There is no risk-free path" on how the Fed proceeds from here, Powell said when asked if the FOMC's members are uncertain about the outlook for the economy. "We get together, we discuss ... and then we decide what to do, and we act."

But he noted that there is a wide dispersion of views on how to proceed on future interest rate decisions. That attitude might disappoint investors who are hoping for clear signs of more rate cuts in upcoming meetings.

- Jim Patterson

Powell sidesteps question on Lisa Cook

Asked about the president's ongoing efforts to remove Fed governor Lisa Cook, Powell closes the door on adding commentary.

"I see it as a court case that would be inappropriate for me to comment on," he said simply - and characteristically.

- Alexandra Svokos

Stocks head south during Powell's presser

Stocks have turned lower since Powell started talking, as markets had hoped for more commitment to lower rates in future meetings. He's not slamming the door on additional rate cuts, but he's also not teeing them up.

In other words, Chair Powell is doing exactly what he's always done.

- David Payne

Powell says today's rate cut is not an isolated action

"I'm not blessing what the market is doing at all," Powell said when asked about whether this initial rate cut will make much difference for the economy, but he suggested that this was not an isolated action, and that financial markets are pricing in additional rate reductions.

That might be more in line with what investors had been hoping to hear. (And stocks have moved off their lows as a result.)

- Jim Patterson

Savers need to strike now, while rates are high

The rate cut, coupled with inflation, can make savers feel the pinch. However, because it's been almost a year since the last rate cut, APYs on high-yield savings accounts and CDs are over 4%. While this might not remain for long, now is an excellent time to capitalize if you have short-term or year-end savings goals you want to reach.

And if you're concerned about inflation, I'll explain how high-yield savings options still outpace inflation for now.

Read more: Are High-Yield Savings Accounts Still Outpacing Inflation?

- Sean Jackson

Powell on labor supply and mortgage rates

On the labor market, Powell said that the job creation rate at which the unemployment rate starts rising has come way down because of lower supply. It could be anywhere from zero to 50,000, but the Fed thinks that the odds the economy is currently below that level seem likely.

On the housing market, Powell noted that mortgage rates have drifted lower and, of course, mortgage rates near zero help housing the most. But the Fed believes a good economy is the best medicine.

- David Payne

Near-term risks to the labor market and inflation are Powell's biggest concerns at the moment

Asked if Powell is concerned that consumers' expectations of long-term inflation are rising, Powell said no, and called most surveys of expected inflation to be "rock solid" in how stable they have been.

He doesn't see signs that markets are concerned the Fed could be losing its prized independence as it comes under more political pressure and thus may be less able to combat inflation pressure.

For now, he is just worrying about near-term risks to the labor market and the price increases he expects tariffs to foster. That sounds like enough to keep him busy.

- Jim Patterson

Thank you, next: Powell will not answer questions about politics

At this point, this much is clear: If you're going to ask Powell about politics, he's not going to give you an answer. Just today, he swiped down questions about the Trump-embattled Lisa Cook, if he would step down (as the president wants), how he feels if Americans trust the president more than the Fed, and so on. His answers are consistently forcefully neutral. There will be no "gotchas" in this room.

And yet ... the press will continue asking, hoping for an opening or momentary slip. We all have editors to answer to, after all.

Of course, this stalwart refusal to add commentary sets up a stark contrast to the president, never one to be accused of keeping his opinion to himself. President Trump has long made use of the power of the press (and social media) to try to get what he wants, stating his wishes loudly and clearly.

Powell won't answer the question of why some people might trust Trump more than the Fed, but I can give it a go: Trump's a politician. His job is predicated on getting people's support. But Powell, especially in how he says he views his role and the role of the Fed, doesn't need the people's support. He just needs to get the numbers right. And, at least as it pertains to the public's trust, that strategy seems to be working.

- Alexandra Svokos

September Fed meeting: what the experts say

With the September Fed meeting now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the outcome and what it could mean for investors going forward.

"Chairman Powell laid out a detailed and logical explanation for why the Fed is now focusing more on labor market weakness than they are on inflation, which should indicate that the Fed plans to do more than one rate cut this year. It's interesting that Waller and Bowman both stuck with consensus – despite auditioning for the Fed Chair position – and the newest member, Miran, has leapfrogged them with an even more dovish 50 bps dissent. It's possible that they are trying to position themselves as more serious members of the Fed, who are interested in cutting rates 25 bps, but don’t feel the need for draconian cuts." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"It is clear that while Fed members have been under a lot of political pressure from the administration, today's decision seems to underscore the fact that the Fed remains independent in its decision-making process. The dot plot also shows that Fed members are worried about economic growth going into the last quarter of the year and are also concerned about potentially higher growth next year, and that is the reason why they are more hawkish regarding rate cuts next year, which is in line with our view on the U.S. economy." – Eugenio J. Alemán, Chief Economist, and Giampiero Fuentes, Economist at Raymond James

"The worst kept secret is now official, as the Fed cut 25 basis points. The door is open to more cuts later this year, but it is clear they are now more worried about the slowing labor market than inflation. All in all, today's news didn't rock the boat and there were no curve balls." – Ryan Detrick, Chief Market Strategist at Carson Group

"The dot plot now implies two more cuts this year, but Powell downplayed its significance, framing the outlook as 'more balanced' rather than decisively tilted toward labor market risks. The SEP revisions, including higher inflation, higher GDP, and lower unemployment, raise questions about the internal consistency of the Fed's policy path. Markets may welcome the easing bias, but the messaging remains nuanced and far from a full pivot." – Dan Siluk, Head of Global Short Duration & Liquidity and Portfolio Manager at Janus Henderson Investors

"Although the outcome of today's decision to lower the federal funds rate by 0.25%, from 4.25% to 4.00%, was anticipated and as expected, it is still one of the most closely watched in recent history. The Fed's decision to reduce rates without further progress toward its 2% inflation goal reflects its concern that 'downside risks to employment have risen.' The widely watched evolving composition of the committee reflects a wide range in the expected rates going forward, according to the dot plots. The lone dissenting vote today was from the most recent addition to the committee, Stephen Miran, who was in support of a more aggressive half-point rate cut." – Louise Goudy Willmering, Partner at Crewe Advisors

"It remains to be seen how the long end of the bond curve will react if inflation accelerates further in coming months and policymakers choose to continue to reduce interest rates. Around the world, additional risk premiums have been moving into long-term bond markets, and any sense that the world's most important central bank is not focused on its mandate could lead to an acceleration of that process." – Dr. David Stubbs, Chief Investment Strategist at AlphaCore Wealth Advisory

- Karee Venema

Dow hits new highs, stocks closed mixed on Fed Day

All three main U.S. stock market indexes spiked after the Federal Open Market Committee announced a 25 basis point cut to the target range for the federal funds rate, but quickly fell back into their intraday ranges and closed mixed.

Factors other than monetary policy figured into a relatively stable trading session, as the world's most important stock suffered another trade war blow.

Nvidia (NVDA) was the worst-performing stock in the Dow after the Fed announcement, even as the index surged as much as 463 points and hit a new all-time high on an intraday basis.

Small-cap stocks – seen to benefit most as a group from lower interest rates – continued to rally into and through the FOMC decision, with the Russell 2000 Index up as much as 2.1% intraday, closing modestly higher and extending to nearly 37% the bounce off its April 9 post-Liberation Day low.

The tech-heavy Nasdaq Composite was down 0.3% at 22,261, and the broad-based S&P 500 had shed 0.1% to 6,600. But the blue-chip Dow Jones Industrial Average was holding a 0.6% gain at 46,018.

The yield on the 2-year U.S. Treasury note inched up to 3.549% from 3.510% as of Tuesday. The yield on the 30-year U.S. Treasury bond edged higher to 4.669% from 4.646%.

Read more about Fed Day price action…

– David Dittman

According to the Bureau of Labor Statistics, headline CPI was up 0.4% month over month in August, higher than the 0.2% rise seen in July and the 0.3% increase economists expected.

The CPI was 2.9% higher year over year, a quicker pace than the month prior and the largest annual increase since January. Still, the results arrived in line with estimates.

Shelter was the "largest factor" behind the monthly increase in headline CPI, according to the BLS, up 0.4% from July to August. Energy costs were also on the rise last month, up 0.7% as gas prices jumped 1.9%.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.3% month over month and 3.1% year over year. Both figures matched what was seen in July and were on par with economists' forecasts.

"We continue to expect the Fed will cut rates next week due to weak labor market data and think it could follow this up with further easing in October," says Simon Dangoor, head of Fixed Income Macro strategies at Goldman Sachs Asset Management.

Dangoor adds that while "near-term inflationary pressures remain high, and further strong readings are likely in the coming months as businesses run down inventories and pass on cost rises, the Fed is likely to draw comfort from anchored inflation expectations and the absence of overheating in the labor market, which reduce the risks of second-round effects."

According to CME FedWatch, futures traders are now pricing in a 91% chance the Fed will issue its next quarter-point rate cut at its meeting next week, up from 86% one month ago. The betting odds are for two additional cuts by the end of the year.

With the August CPI data now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

Experts' takes on the August CPI report

"Thursday's CPI was in line with expectations and will not derail the Federal Reserve's expected rate cut at the September meeting. It's clear that inflation is relatively calm, which gives the Fed the flexibility to focus more on stemming ongoing weakness in the labor market. While inflation is still running above ideal levels, the full employment portion of the Fed mandate is carrying much more weight." – Skyler Weinand, Chief Investment Officer at Regan Capital

"Right now, inflation is a key subplot, but the labor market is still the main story. Today's CPI may appear to offset yesterday's PPI, but it wasn’t hot enough to distract the Fed from the softening jobs picture. That translates into a rate cut next week – and, likely, more to come." – Ellen Zentner, Chief Economic Strategist for Morgan Stanley Wealth Management

"The last bolt on the gate has fallen out and the rate-cutting horse is about to leave the barn. The Fed's path is clear in the short run, but over the medium term, the fact that core inflation is running quite a bit higher on a month-over-month basis is going to complicate matters and the market knows this. Watch the market reaction today, because all things being equal, a rate cut should be very bullish for the market, but the 0.4% month-over-month inflation rate is much too high for a sustained rate cutting cycle and it will now be an issue of how many more times can the Fed cut if inflation does not head toward their 2.0% year-over-year target." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"For the first time in a long time, CPI is being overshadowed on its release day by another data series: initial jobless claims. A spike in initial jobless claims to the highest level in 4 years helped briefly push the 10-year Treasury below 4% this morning, despite a larger-than-expected increase in the consumer price index. This dynamic illustrates the Fed's focus on the 'maximum employment' half of the dual mandate, with today's inflation print not hot enough in our view to derail a 25 basis point interest rate cut at next week's FOMC meeting." – Josh Jamner, Senior Investment Strategy Analyst at ClearBridge Investments

"In today's numbers, we are seeing some impact from tariffs, especially with higher prices on cars and clothes. A sticky category not as connected to trade is insurance which we expect to weigh on inflation for the next few months. The hot inflation print will not likely change the Fed's plan to cut rates in September but it's possible the Fed will hold in October if inflation expectations no longer look well-contained." – Jeffrey Roach, Chief Economist for LPL Financial

"As expected, consumer inflation rose to the highest level since January, driven by price increases in shelter and food. There was not much surprising in the report, but the increase in food prices happened at the fastest pace so far this year. Housing has been a consistent source of inflation. Much of this year, Chair Powell has noted that risks to price stability and full employment were equally balanced. After the meaningful jobs revision last week, many believe that the risks to full employment now outweigh the risks to prices. The Fed probably sees that as well, but today's inflation report likely means a modest 25-point decrease rather than a larger cut." – Scott Helfstein, Head of Investment Strategy at Global X

"Inflation is in line with expectations but still running hot. Core CPI at 3.1% is still stubbornly high, and while in-line expectations set us up for a rate cut in September, I believe the market pricing in 3 is too much given the performance of equity prices and high overall inflation. Watch out for developments in the Middle East. Higher oil prices can put the Fed in a tough position when we already saw higher food and shelter prices." – Jason Barsema, Co-Founder and President at Halo Investing

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Among the losers that day, according to S&P Global Market Intelligence, were leisure-travel companies Norwegian Cruise Line Holdings (NCLH) and Carnival Corp. (CCL), which each fell about 5%. Other travel and leisure companies that fell at least 3% that day included United Airlines (UAL) and Delta Air Lines (DAL); Caesars Entertainment (CZR), MGM Resorts (MGM), Las Vegas Sands (LVS), and Wynn Resorts (WYNN); Expedia Group (EXPE); and Marriott International (MAR). Several energy and agricultural companies and defense contractors gained at least 2% that day.

Any unrest in the Middle East can have a major impact on the global economy if oil production gets disrupted. Oil shocks in 1973, 1979, and 1990 caused recessions and bear or near-bear markets.

But this past June, the market rebounded quickly as investors saw Iran’s retaliatory measure of limited strikes on a U.S. military base as a moderate response.

Seven of the 10 travel and leisure companies noted above gained at least 7% from June 13 to the end of the month. Norwegian and Carnival went up 14% and 26%, respectively. Many of the energy, agriculture and defense companies gave back all their gains, plus more. Halliburton (HAL) rose 6% on June 13, then fell 12% by June 30.

The lesson for investors: Markets typically recover from a geopolitical event quickly.

“It ends up being much more of a headline event than a bottom-line event,” says market historian Sam Stovall, chief investment strategist at market research firm CFRA. Stovall has studied nearly a century of shocks and found that seven out of 10 times, the stock market is up — sometimes meaningfully so — three months after the event.

Take, for example, the Boston Marathon bombing in April 2013. That day, the S&P 500 fell 2.3%. Ninety calendar days later, the S&P index was up 5.7%.

Stovall’s list contains 25 events dating back to Pearl Harbor. In 11 cases, the markets were up 30 days later. In 16 cases, they were up 60 days later. And in 18 cases — or 72% of the time — they were up 90 days later.

Long-term buying opportunities

Some events are sufficiently cataclysmic to trigger a recession; Iraq’s August 1990 invasion of Kuwait is one example. (The market fell 1.1% that day, and 90 days later it was down 14.5%.) But, Stovall says, most shock-driven market drops may instead be buying opportunities for the longer-term investor, in terms of the market as a whole or specific stocks or sectors.

Matt Gertken, of BCA Research, who gauges the geopolitical risk of certain scenarios, has moderated his assessment of the situation in the Middle East.

In mid-June, he saw a 60% probability of a major oil shock resulting from the current strife, with a 40% probability of a minor shock. (A minor oil shock is a reduction in oil output that can be solved in short order by other countries increasing their production. Major oil shocks are longer-term problems.) After the muted Iranian response, he reduced the probability of a major shock to 25% and allowed for a 25% chance that there will be no geopolitical impact on oil from the current events.

“As of mid June, I was basically saying there was a 0% chance that oil would be unaffected,” Gertken says.

Stay cautious amid the volatility

The market’s quick recovery and subsequent gains suggest investors are placing even less probability on Middle East risk and oil shocks. Nonetheless, says Gertken, it’s not the time to become complacent.

“Individual investors should recognize that with the market having recovered from Trump’s tariff announcement and rallied in the wake of what appears to be a dodged bullet with the Iran conflict, we’ve had a lot of good news priced in,” he says. “It might be a good time to take some risk off the table because there are still plenty of reasons to be cautious going forward.”

Chris Haverland, a global equity strategist at Wells Fargo Investment Institute, says the research firm currently prefers quality large-company stocks over small caps, and it prefers developed international markets over emerging economies. Recommended portfolios currently have more commodity exposure — to both energy and precious metals — than is typical.

“It’s obviously unpredictable,” he says. “You can’t really position a portfolio tactically prior to an event. And then you don’t want to be making changes during an event, because typically they’re short-lived — for example, the 12-day Israel–Iran war. So the best defense is to be diversified going into geopolitical events.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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A big shift in economic policy is underway. One that includes more federal involvement in parts of the private sector that were once off-limits. The shift began in Donald Trump’s first term. Now, the president is attempting to cement it.

Among the steps that Trump has taken so far:

Making the government a major shareholder of so-called national champion firms, such as Intel and U.S. Steel, to shore up the manufacturing base. Both companies have lost ground in recent decades, even with extensive efforts to engineer a turnaround. The administration has also floated taking a big stake in major defense contractors, such as Lockheed Martin.

Establishing more public-private partnerships in sectors critical to national security.
One example: A multibillion-dollar agreement with MP Materials to create a mine-to-magnet rare earths supply chain.

Imposing and threatening higher tariffs, hoping to strong-arm supply chains back to the U.S. Case in point, biopharma — one of the many industries facing higher duties — has pledged at least $292 billion to expand U.S. manufacturing in the past six months.

Most of the president’s moves have a national security angle.
The decline of the U.S. manufacturing base is one of Trump’s long-running concerns. Moreover, he has so far focused primarily on industries where ongoing competition with China is a concern. Beijing now dominates “traditional” manufacturing industries like steel and is increasingly making advances in high-tech areas, including semiconductors.

His policies are also limited to where the White House has clear leverage, such as extensive federal subsidies (Intel) or a pending merger approval (U.S. Steel). The big question now is how far the administration ultimately plans to go. For now, it’s signaling clear limits in its intentions, focusing mostly on manufacturing. Case in point, federal officials say that they have no plans to take a stake in Nvidia, a chipmaker, which, unlike Intel, outsources all of its manufacturing to other firms.

The risk of a legal backlash grows if Trump pushes further. For example, if the administration begins to regularly require companies to give Uncle Sam shares as a condition of receiving government contracts, as well as permits and licenses, lawsuits are highly likely. The White House could see its strategy blow up sooner than that if the courts nix its current authority to impose across-the-board tariffs.

Also unclear: How effective this strategy will be. Intel will be a key test case. More federal involvement could help the struggling chipmaker land more customers, or it could worsen the company’s long track record of corporate mismanagement.

Trump’s policies are not unprecedented, but their permanence is unusual in modern times. For example, Uncle Sam temporarily took ownership of GM in 2009.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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According to the Bureau of Labor Statistics (BLS), nonfarm payrolls rose by 22,000 in August, missing economists' estimate for 75,000 new jobs. Figures for June were revised down by 27,000, from adding 14,000 to losing 13,000, while July job growth was upwardly revised by 6,000 (from 73,000 to 79,000 additions).

With these revisions, the U.S. added 21,000 fewer jobs in June and July than previously reported.

As for August, job gains were seen in health care (adding 31,000) and social assistance (adding 16,000). However, federal government jobs declined by 15,000, and are now down by 97,000 since January.

The unemployment rate, which is calculated from a separate survey, ticked up to 4.3% from 4.2%. The data also showed that wage growth was 0.3% higher month over month in August and 3.7% year over year.

"The labor market continues to show fatigue as businesses hold back on hiring amid uncertainty around the direction of inflation, tariffs and the strength of the underlying economy," says Joe Gaffoglio, president and CEO at Mutual of America Capital Management.

Gaffoglio adds that data released earlier this week showed that more folks are unemployed than there are available jobs, which hasn't happened since April 2021.

"Not surprisingly, consumer confidence dipped in August, and discretionary spending was mixed. Overall, the economy is showing indications of softening, even as equity markets near all-time highs."

Against this backdrop, it's all but certain the federal funds rate will be lowered at the next Fed meeting later this month.

According to CME Group's FedWatch, futures traders are pricing in an 88% chance the Fed will cut rates by a quarter-percentage point when it concludes its next meeting on Wednesday, September 18.

The odds of a jumbo-sized half-percentage-point cut are also on the rise, last seen at 12% after not even being considered an option a day ago.

Futures traders are also pricing in strong odds of a rate cut at the Fed meetings in October and December.

With the August jobs report now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

Experts' takes on the August jobs report

"Today's softer-than-expected jobs report underlines the growing downside risks to the labor market. Hiring is running close to stall speed, and the breadth of jobs gains remains poor. While slow supply growth is mitigating upward pressure on the unemployment rate, the Fed is acutely aware that a low-demand, low-supply equilibrium is fragile and vulnerable to deterioration. A rate cut at this month's meeting was already to be expected, and today's data suggests the risk that the Fed may embark on a faster pace of easing than the cautious approach outlined by Powell at Jackson Hole." — Simon Dangoor, Head of Fixed Income Macro Strategies at Goldman Sachs Asset Management

"While the revisions to the prior months were not as significant as the ones seen in the jobs report from one month ago, the June jobs data was revised lower to a negative number, which is further evidence of a labor market that has slowed considerably. The labor market has been weakening, and while that greenlights a September rate cut, the Fed would be cutting interest rates in an environment with elevated inflation, which is unusual. The Fed's preferred inflation gauge as of late has been moving farther from the central bank's 2% target, not closer to it." – Rich Mullen, Founding Partner and CEO at Pallas Capital Advisors

"The August payrolls release did little to quell fears of a recessionary-esque labor backdrop with job creation remaining at stall speed. Nothing in today's report changes the outlook for a September rate cut, with concerns over the labor market trumping the desire to wait for more clarity on tariff-induced inflation. This report is supportive of additional and faster rate cuts beyond September, which, combined with next week's QCEW revisions, could influence the degree to which the Federal Open Market Committee lays the groundwork for additional rate cuts later this year." — Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments

"This report syncs with our view that the labor market is likely to gradually decelerate in the coming months/quarters and [we] continue to look for the unemployment rate to move higher by the end of this year. Our projection has called for a 4.5% unemployment rate by year-end 2025 as the economy slows. [Investors should] trim funds from U.S. small caps, [the] communications services sector and emerging markets. Use those funds to buy sectors that we favor but have lagged in recent months: Utilities (favorable) & Financials (most favorable)." — Scott Wren, Senior Global Market Strategist at Wells Fargo Investment Institute

"This week has been a story of a slowing labor market, and today's data was the exclamation point. The initial reaction suggests markets are focused on Fed rate cuts rather than concerns about a cooling economy. Bad news looks like good news, at least this morning." — Ellen Zentner, Chief Economic Strategist for Morgan Stanley Wealth Management

"The paltry number of jobs added last month deserves some context. The breakeven rate – where the number of jobs added each month supports a healthy labor market — moves based on how the labor force grows (or doesn't). And labor force growth depends pretty significantly on immigration. If the labor supply is constrained by immigration policies, for instance, the number of jobs added can slow significantly without an uptick in unemployment. This obviously doesn't mean today’s jobs report is good; June's figures were revised to a negative. But as policies that affect the economy change, so does the data — both the headline figures and their interpretations." — Elizabeth Renter, Senior Economist at NerdWallet

"Job growth is clearly signaling a slowdown in the economy. Even factoring in concerns about data accuracy, the latest BLS figures are now aligning with what other surveys and data providers have been indicating for months. As a result, despite lingering uncertainty around inflation, the weakness in the labor market is too significant for the Fed to ignore." — Kevin O'Neil, Associate Portfolio Manager & Senior Research Analyst at Brandywine Global

"Today's nonfarm payroll report reinforces the view of a labor market losing momentum. Though not yet at recessionary levels, the overall tone of the report was soft. The data likely cements a 25 basis-point Fed cut later this month. Despite inflation remaining above target, the Fed appears more concerned with helping the labor market than forcing inflation down, and importantly, it does not view wage growth as a risk that would derail easing. A 50 basis-point cut in September remains unlikely, but markets are leaning toward the possibility of back-to-back 25 basis point cuts in September and October." — Mike Sanders, Head of Fixed Income at Madison Investments

"Following last month's large negative net revisions and resulting personnel shake-up at the BLS, there is some trepidation toward the accuracy of the nonfarm payroll data. A press release earlier this morning that the BLS was experiencing technical difficulties, potentially resulting in delays didn't help matters. Alas, the monthly BLS labor market report was released on time. While market participants are beginning to weigh other labor market data produced by private sources more heavily, such as ADP and the ISM surveys, market reaction to today's weak nonfarm payroll print shows that investors still regard it as tier one data, for now." — Jeffrey Hibbeler, Director of Portfolio Management at Exencial Wealth Advisors

"Another weak jobs report shows last month's downward revisions were real. Job growth has slowed to just slightly positive. A 25 basis-point (bp) September rate cut looks locked in with guidance towards another couple more rate cuts this year. The print was probably not weak enough for a 50-bp cut in September (we think we needed a negative print, unemployment above 4.4%, and then very soft inflation print next week)." — John Luke Tyner, Head of Fixed Income and Portfolio Manager at Aptus Capital Advisors

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Amid the hype over AI, a practical question: When will the technology boost the economy the way its developers and promoters are promising? Is artificial intelligence going to unleash a surge in worker productivity, as epochal new tech has done in the past? Or is investor enthusiasm for it overdone?

In one sense, AI is already adding to GDP. Spending on AI hardware is astronomical, both for the costly, specialized chips that power AI and the related infrastructure to deliver the electricity that those chips devour. This spending raised GDP by 0.3% in the second quarter of this year. Even that doesn’t fully capture the size of this investment surge, since some capital outlays that tech firms are making don’t show up in the official GDP accounting method. Just look at the top five firms by AI investment: Amazon, Alphabet, Meta, Microsoft and Oracle. The increase in their AI-related capital expenditures over the past two years equals about 10% of GDP gains in the U.S. over that time period. Add the power plants, transmission lines and other infrastructure they need to run their data centers, and the outlay is even bigger.

There are also signs that businesses are gearing up for AI to make an impact on their operations. Company mentions of AI use for research tripled since Nov. 2022, when ChatGPT launched and turbocharged generative AI. 25% of job listings posted for IT professionals since the start of last year have asked for AI-related skills. The number of mobile AI app downloads hit 60 million this March. Internet searches related to AI have grown tenfold since OpenAI unveiled ChatGPT to the public. When it comes to whether AI will make workers more productive, the picture gets murkier. There are some early signs that it’s happening. Inflation-adjusted revenue per worker among S&P 500 companies has been rising since late 2022, following a 15-year period when it stayed flat.

It’s not clear why, but the overlap with advanced AI applications going mainstream is hard to ignore. But with so much money pouring into AI, there are reasons for skepticism. Much of the investment being made today could end up wasted. Many companies that are in vogue now figure to fail. It’s possible that AI computing power being rushed online could ultimately prove to be unneeded, akin to how fiber-optic cable networks got overbuilt in the 1990s. That capacity eventually got used as data consumption rose, but not before builders who spent too much on it went bankrupt. If the current AI data center boom fizzles, the pullback in spending could spark a mild recession, as the tech bust in 2001 did. Most major technological leaps take time to filter through the economy. AI does seem genuinely transformative. But the transformation may take many years.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Based on allegations of mortgage fraud made by Federal Housing Finance Agency Director Bill Pulte and referred to Attorney General Pam Bondi, Trump cited his authority under Article II of the Constitution as well as the Federal Reserve Act to remove Cook for cause, effective immediately.

Responding to the president, Cook said she would not leave her position. "President Trump purported to fire me 'for cause' when no cause exists under the law, and he has no authority to do so. I will not resign."

President Trump has been pressuring Fed Chair Jerome Powell to cut interest rates since he took office in January. And markets certainly weighed whether the president can fire the Fed chair.

Can Trump fire Cook?

Ruling on a matter with different facts but similar questions of law in May, the Supreme Court considered "the constitutionality of for-cause removal protections for members of the Federal Reserve's Board of Governors or other members of the Federal Open Market Committee."

In an unsigned opinion, six justices acknowledged, "The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States."

Meanwhile, Trump is seeking other ways to shape monetary policy. Former Fed Governor Adriana Kugler recently resigned and will be replaced on the seven-person panel by White House Council of Economic Advisers Chair Stephen Miran. Miran is one of 11 candidates to be the next Fed chair.

Should Trump fire cook?

Cook has retained renowned Washington D.C. lawyer Abbe Lowell to represent her. Lowell told the WSJ that Trump's attempt to fire Cooks "is flawed and his demands lack any proper process, basis or legal authority. We will take whatever actions are needed to prevent his attempted illegal action.”

U.S. equity indexes opened modestly lower Tuesday, with market participants generally undisturbed by the news. The U.S. Dollar Index (DXY) was down modestly from 98.43 at Monday's closing bell to 98.23 shortly after Tuesday's opening bell.

The yield on the 2-year U.S. Treasury note was at 3.694% vs 3.730% as of Monday's closing bell.

The yield on the 10-year U.S. Treasury note was up to 4.281% vs 4.275% Monday, and the 30-year yield was at 4.924% from 4.889%.

Shorter-dated Treasuries are more sensitive to Fed interest rate policy. Longer-dated Treasuries say more about the macro picture.

"President Trump’s attempt to fire Federal Reserve governor Lisa Cook is the most dramatic step yet in his effort to take control of the independent central bank and its vast authority over interest rates," write Matt Grossman and Greg Ip of The Wall Street Journal.

As Professor Peter Conti-Brown of the University of Pennsylvania told Grossman and Ip, "To the extent that Fed independence stands for anything, it stands for the idea that monetary policy should not be made by the whims of the sitting president."

According to Conti-Brown, a financial and legal scholar, "If we allow this to become the norm, then this is the end of Federal Reserve independence as we know it."

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But normies really just care about what Federal Reserve Chair Jerome Powell had to say in his speech Friday morning.

After all, when the Fed chief speaks, markets listen. And that's especially true at this particularly delicate time for both the economy and the independence of the Federal Reserve.

Powell walked a fine line when he delivered what will likely be his final keynote address at Jackson Hole.

The Fed's dual mandate of maximum employment and stable prices is increasingly challenged by a softening labor market and above-target inflation.

In terms of these goals, Powell said in his Jackson Hole speech, that "the labor market remains near maximum employment, and inflation, though still somewhat elevated, has come down a great deal from its post-pandemic highs."

However, Powell added that "the balance of risks appears to be shifting," and this "may warrant" the Fed adjusting its policy stance.

With Powell & Co. increasingly under pressure from the White House to lower interest rates, the Fed chair added that Federal Open Market Committee (FOMC) members will make policy decisions "based solely on their assessment of the data and its implications for the economic outlook and the balance of risks" and "will never deviate from that approach."

Should the Fed cut rates?

In an argument for lower rates, it's true that gross domestic product (GDP) grew at an annual rate of only 1.2% in the first half of the year. Second-half growth is set to come in at a "still-subdued" 1.3%, writes David Payne, staff economist at The Kiplinger Letter, in the Kiplinger GDP Outlook.

A softer labor market also helps make the case for lower rates. The July jobs report featured "stunning revisions that suggest the labor market slowdown has happened earlier than economists expected," Payne notes in the Kiplinger Jobs Outlook.

On the other hand, inflation remains above the Fed's long-term target and tariffs are very much complicating the outlook.

"Inflation has made little progress toward the Fed's 2% target since last year's Jackson Hole conference," writes Lauren Goodwin, economist and chief market strategist at New York Life Investments. "The labor market is better balanced, but increasingly shaped by a mix of cyclical softening, structural trends and policy-driven shocks."

Powell also faces challenges outside the arena of economic data. In addition to the mounting political pressure for the Fed to cut rates, Powell's tenure as chief has even seemingly been put at risk.

More recently, President Donald Trump is threatened to fire Fed Governor Lisa Cook amid allegations over her mortgages.

And inside the Fed, two voting members of the FOMC dissented with the central bank's move to keep rates steady at its July meeting.

Either way, odds are that the central won't stand pat at the next Fed meeting.

Following Powell's Jackson Hold speech on Friday, interest rate traders are now assigning a 91% probability to the FOMC cutting the short-term federal funds rate by a quarter of a percentage point, or 25 basis points, in September.

That's up from 75% one day ago and 58% a month ago, according to CME Group's FedWatch, reflecting changes in the labor market.

What the experts say about Powell's Jackson Hole speech

With the Fed Chair Powell's Jackson Hole speech now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

"Fed Chair Powell has begun to turn the wheel of the Fed with his speech today, which should benefit consumers and small businesses, along with sectors benefiting from AI, technology, REITs and ttilities. All these sectors benefit from lower financing costs and their dividends will be more attractive with lower bond yields. This is only the beginning of what I hope is a new commitment to several future rate drops." – Ben Fulton, CEO of WEBs Investments

""As expected, Powell's comments remained measured. He acknowledged the difficulty in the Fed's current balancing act and re-re-reiterated their reliance on data-driven decision making. However, he also seemed to conclude that tariffs were more likely to drive a one-time increase in prices, rather than drive a more continuous upward trend in inflation, which would be a change in his stance. He also noted the clear slowdown in the labor market. The implication was that the likelihood of a rate cut in September was even higher than it had been before." – Melissa Brown, Managing Director of Investment Decision Research at SimCorp

"This is just what investors were hoping to hear, given the recent slowdown in the labor market. While there is still one more employment report before the September meeting, it's clear the Fed has enough data under its belt to justify a September cut. The stock market tends to favor lower interest rates and given the likely prospect of a September cut, we expect the market's bullish trend to continue over the short term. We would not be surprised to see a 5-10% correction in the S&P 500 sometime between September and October, in line with historical trends, before rallying to 6,500 through 7,000 by the end of the year." – David Laut, Chief Investment Officer, Abound Financial

""The macro outlook should convince the Fed to cut rates at the September 17th meeting. The hint of upcoming rate cuts will tamp down yields and bolster markets in the near term. But looking out on the horizon, structural shifts in the economy have created uncertainty about the long-run fed funds rate. Suffice it to say, the neutral rate will be higher than during the 2010s." – Jeffrey Roach, Chief Economist for LPL Financial

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Business Outlook: Economic impacts

When it comes to the economy, expect moderate growth. GDP figures should grow 1.6% in 2026, versus 1.7% in 2025. Manufacturing will continue to be sluggish, and consumer spending will slow a bit. But recession fears will fade into the background. Look for the Federal Reserve to cut its short-term interest rate by 2.0 points between September 2025 and the end of 2026, from 4.25% to 2.25%.

As the Fed cuts, other short-term rates will fall, too: Short-term consumer lending, home equity lines of credit and interest earned on Treasury bills. Long-term rates will likely rise a bit, with 10-year Treasury notes fluctuating around 4.5%. 30-year mortgage rates will be around 7% or a bit less. The unemployment rate will end 2026 at 4.5%, up slightly from 4.3% this year.

It’s likely inflation will stay stubborn, only getting down to 3.0% by the end of 2026, from 3.4% at the end of 2025. Tariffs will be more predictable next year, but businesses will still have to choose to absorb the cost or pass it on to customers. Tariffs will add about 15% to the cost of most imports, on average, this year; much more for some raw materials. 2026 tariffs are likely to target specific products or industries.

Corporate profits will rise 10% in 2026, a similar increase to 2025. Pay hikes figure to run 3.5%, similar to 2025, and close to the normal rate. Small businesses will see average wage hikes of 4.0%. Total benefit compensation will rise 3.8%, with an 8% rise in health insurance premiums. Prescription drugs are a big driver, with prices rising 3.4% and drug usage expanding. Spending on drugs will be up 8%, spurred by weight loss drugs, and gene and cell therapies.

Business Outlook: Energy costs

After easing this year, oil prices could dip a bit lower in 2026. As always, there is the risk of some sort of geopolitical crisis, likeliest in the Middle East, that could cause prices to spike. But barring that, the oil market seems well-supplied, while demand growth should be fairly modest. That suggests prices will trend lower.

Gasoline prices, which are down this year from 2024, could slip a bit more on average in 2026. Diesel will also hold fairly steady or possibly decline slightly. Natural gas tends to be volatile, but the overall trend should be up a bit. Gas prices were unusually low last year and have rebounded in 2025. Gas demand continues to grow, largely due to increasing electricity consumption, since natural gas is the top fuel for generating power in the U.S. Gas exports will also continue to rise. Unusually cold or mild weather could always cause gas prices to spike or crash. But otherwise, plan to pay 5%-10% more in 2026 than what you’re paying this year.

Budget more for electricity, too. Rates have been climbing swiftly as demand for power keeps soaring, especially from AI data centers. Figure on a 2%-4% increase for industrial and commercial customers compared with their rates this year.

Truck spot shipping rates will rise just 1% (excluding fuel surcharges), after a 2% rise in 2025, as manufacturing sees weak growth. Rail shipping costs will rise at about the same pace as wage growth, except that intermodal rates should continue easing as imports remain below normal. Ocean shipping rates will be back at low 2023 levels. Air cargo rates will ease, as volumes are set to decline.

Business Outlook: Payroll costs

Payroll taxes are rising, as the $176,100 wage base rises to about $183,600. For firms that pay pension premiums to the Pension Benefit Guaranty Corporation, there will be no change in rates, with the exception of inflation-related indexing for flat-rate premiums, which will hover around $111 per plan participant in 2026. Variable-rate premiums for underfunded plans will be $52 per $1,000 of unfunded vested benefits (subject to a $747 or so per-participant ceiling).

2026 will be a bit of a mixed bag on insurance. Rates for commercial property insurance will decrease for the rest of 2025 and into 2026 because of intense competition among insurers for low-hazard risks. For those policies with favorable histories that are not heavily exposed to natural catastrophes, renewal rates should be flat or see up to a 15% decline. For those exposed to natural catastrophes, a rate hike of up to 10% is likely. For policies with recent losses, an average hike of up to 20%. Rates for primary casualty insurance, up 5%-10%. Umbrella and excess liability, up to a 20% increase. Companies renewing cyberinsurance policies should budget for an increase of up to 5%. For those with recent claims or incidents, a 10% hike. Companies can lower cyber premiums with bigger investments in digital security. Rates for directors and officers insurance will dip in 2026, similar to recent trends.

Legal costs for businesses will rise about 3%-5% next year, on average. Accounting costs for the typical company will rise up to 10% next year.

Business Outlook: Travel and transportation costs

Airfares will inch up slightly after a modest fall this year, as turbulence in prices during and after the pandemic has finally subsided. Production delays of new aircraft could squeeze airline capacity, thus a slight bump in ticket prices. Expect hotel room rates to rise just a bit — about 1% more than this year — though price hikes will vary depending on the type of room, hotel and location. Softening travel demand should keep rates in check.

Soccer’s World Cup tournament is being played in 16 North American cities, 11 of them in the U.S., from June 11 to July 19, 2026. Rooms near and around host cities will be extremely expensive and scarce.

Car rental rates will be slightly higher, as demand and supply equalize after years of market upheaval. Look for an average daily rate of just below $50, about a 2%-3% hike versus 2025. Vehicle availability has improved significantly.

Business Outlook: Property costs

Asking and effective rents for office space will rise at a quicker pace than the 2% or so rise for the rest of 2025. Vacancy rates will remain elevated. Newer, high-quality office space will likely see rent growth of about 3%-5%. Meanwhile, older properties are likely to see continued rent declines of 3%-4%. Asking rents for warehouses will likely pick up as new construction of warehouse space slows down significantly next year. Look for rents rising by about 2%-3%, after a modest decline of 1%-2% seen for the rest of this year. Rents for shopping centers will rise 1%-2%, on average, in 2026. Vacancy rates are low and retail tenants often have few suitable options.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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According to the Bureau of Labor Statistics, headline CPI was up 0.2% month over month in July, slower than the 0.3% rise seen in June and in line with economists' estimates.

The CPI was 2.7% higher year over year, unchanged from the month prior and slightly below economists' projections for a 2.8% rise.

Shelter was the "primary factor" for the monthly increase in headline CPI, according to the BLS, up 0.2% from June to July. However, energy costs declined in July, falling 1.1% as gas prices dropped 2.2%.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.3% month over month and 3.1% year over year. Both figures were higher than what was seen in July, while the annual increase came in hotter than economists' forecasts.

"Inflation is on the rise, but it didn't increase as much as some people feared," says Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. "In the short term, markets will likely embrace these numbers because they should allow the Fed to focus on labor-market weakness and keep a September rate cut on the table."

Over the longer term, though, Zentner says that "we likely haven't seen the end of rising prices as tariffs continue to work their way through the economy."

According to CME FedWatch, futures traders are now pricing in a 90% chance the Fed will issue its next quarter-point rate cut at its September meeting, up from 86% one day ago and 57% one month ago. The betting odds are for two additional cuts by the end of the year.

With the July CPI data now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

Experts' takes on the July CPI report

"While one data point does not make a trend, two consecutive months of higher 12-month [core] inflation will make it difficult for the Fed to justify a rate cut at their September 17 meeting. We remain bullish on the S&P 500 index into year-end, but we do not expect a September rate cut unless the jobs market drops off drastically over the next 45 days. If the Fed has to choose between shoring up the labor market or fighting inflation, we believe they will opt to backdrop the labor market." – Larry Tentarelli, Chief Technical Strategist for Blue Chip Daily Trend Report

"Today's release showed less of a pickup in goods prices than some were expecting as the tariff pass-through is present but to a lesser degree than was seen in June. Given the uncertain and shifting tariff landscape that existed through the month of July and into August, we would be hesitant to read too closely into today’s release." – Josh Jamner, Senior Investment Strategy Analyst at ClearBridge Investments

"The July CPI report came in broadly in line with expectations, reinforcing the view that inflation is under control, even if not quite at target. The headline print was contained by falling energy and gasoline prices, while services remained the primary driver of the overall increase. Meanwhile, core services inflation was driven by volatile components like airfares and medical care, categories that have a lower weight in the Fed's preferred PCE measure. In our view, the Fed will look through the noise in goods inflation and focus on the broader macro signals; labor market softness, consumer fatigue, and the risk that slowing growth could become deflationary over the medium term." – Daniel Siluk, Head of Global Short Duration & Liquidity at Janus Henderson Investors

"July's CPI figure came in in line with expectations, with core inflation at 3.1% year over year. The Fed is getting the data support that the tariff effect on price level will mostly be transitory. The Fed's policy stance is highly data-dependent, and with inflation contained and labor market softness increasingly evident in revised payroll data, the emphasis will now be skewed toward employment. In essence, this inflation print supports the narrative of an insurance rate cut in September, which will be a key driving force for the markets." – Alexandra Wilson-Elizondo, Global Co-CIO of Multi-Asset Solutions at Goldman Sachs Asset Management

"Although the Fed supposedly focuses more on the core number than on the headline number (in order to strip out the noisier components of inflation), we don't believe that this report will deter the Fed from cutting rates next month. More importantly, there is one more jobs report (on 9/5) and one more CPI report (on 9/11) before the Fed meets again and those reports will take on even more importance as the Fed decides whether to cut rates to preemptively support the labor market or whether the inflation reports are concerning enough that they feel like they need to sit on their hands and wait." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

""So far, U.S. businesses have absorbed the tariff costs, as revealed in many corporate earnings reports. It's only a matter of time before tariff costs make their way through to consumers if businesses want to maintain margins and profitability. We expect at least two rate cuts between now and the end of the year. The Fed is under immense pressure to move off their holding pattern and the data is starting to align with a move towards lower interest rates, which would provide an insurance policy against a slowing economy." – Skyler Weinand, Chief Investment Officer at Regan Capital

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Some situations are more obvious than others. But conference call commentary from C-suite executives generally suggests management teams are still seeking clarity about the impact of Trump's tariffs on revenue and margins – and will be for some time.

Efforts to offset potential negative impacts generally include controlling costs and managing prices. Commentary so far indicates supply chain adjustments and other cost-cutting moves are already happening, with scaled-back promotions and straight-up price hikes on the horizon.

We have heard multiple explicit profit warnings from companies operating in different goods-producing and consumer-facing spaces, such as automakers. However, some companies are revising their forecasts for the impact of Trump's tariffs, even providing more optimistic guidance.

The bottom line is impacts will vary from sector to sector and stock to stock, and we'll be tracking them now, for the next several quarters and the next several years as the Trump administration attempts to reshape global trade.

Headwinds or tailwinds

Since April 2, when President Trump first introduced his tariffs, we've seen a steep stock market sell-off followed by a historic rally to new all-time highs.

Markets have been similarly moved by incoming inflation data, which will continue to be noisy from report to report and period to period as the impact of tariffs works its way through the economy.

That the S&P 500 and the Nasdaq Composite have made new all-time closing highs and the Dow Jones Industrial Average has come within points of its own fresh peak this summer suggests that market participants are more optimistic now than they were when the indexes bottomed on April 7.

And it's possible, according to WisdomTree macro strategist Samuel Rines, that some impacts of Trump's tariffs could be positive for specific companies and their stock prices, at least in the short term.

"Many of the companies that provided guidance for tariff impacts in the past," Rines wrote in a late-July assessment of second-quarter earnings season, "are guiding away some of the impact in the future."

And we'll continue to hear from companies "with 'too much tariff' priced in," according to Rines, during the current reporting period and for as long as the Trump administration uses tariffs to advance trade and other policy goals.

Expectations management

Second-quarter earnings-per-share growth for the S&P 500 is tracking at 9% year over year as of this writing vs a pre-season estimate of 4%. And more than six of every 10 S&P 500 companies are beating earnings expectations, one of the best performances in a quarter century.

According to FactSet Senior Earnings Analyst John Butters, "Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above their 10-year averages."

At the same time, as Goldman Sachs Chief U.S. Equity Analyst David Kostin observes, "Sharp downward revisions to analyst estimates earlier this year created an unrealistically low bar for companies heading into the reporting season, boosting the frequency of earnings beats."

It is a market of stocks, and those stocks represent companies, some with more and some with less exposure to tariffs. Trends with even greater gravity, such as artificial intelligence (AI) and the infrastructure build-out to support it, are also in play.

So the stories to watch over the next several quarters, according to WisdomTree's Rines, are on the ground.

"Some will execute," Rines concludes. "Some will not."

For some groups, it's the theme, for others just a theme. So let's take a look at how your exposure to specific sectors and stocks could be impacted by President Trump's tariffs.

Communication services

Communication services stocks such as Alphabet (GOOGL), Meta Platforms (META) and Netflix (NFLX) that see greater shares of revenue from advertising and subscriptions are likely to be more resilient in a rising-tariffs environment.

GOOGL is up 29%, META 45.4%, and NFLX 33.5% since April 7.

Through August 1, the Communications Services Select SPDR ETF (XLC) is up 21.8% from the April 7 post-Liberation Day bottom.

The sector includes old-school telecoms such as AT&T (T) and Verizon Communications (VZ), which are up 5.6% and 3.9%.

Consumer discretionary

Ford Motor (F), like fellow automakers General Motors (GM), Stellantis (STLA) and Tesla (TSLA), is a consumer discretionary stock.

Ford recently reported its first quarterly loss in two years due to an $800 million tariff hit. F stock is actually up 20.2% since April 7.

GM, which reported $1.1 billion in tariff costs for the second quarter and expects a total impact of $4 billion to $5 billion for the full year, has added 21.6%.

Stellantis expects a $1.5 billion profit hit this year; the stock is up 3.1%.

Tesla's better positioned than traditional automakers in the U.S. market due to its domestic production and supply chain concentration in North America, and this is reflected in its 29.7% gain off the April low.

Meanwhile, Amazon.com (AMZN), up 22.5% since April 7, presents a complex case because of the depth and breadth of its third-party seller market. That's a big question for this and future reporting periods.

All told, the Consumer Discretionary Select SPDR ETF (XLY) is up 19.9% since April 7.

Consumer staples

When Procter & Gamble (PG) reported its second-quarter results, management said it expects approximately $800 million in higher costs for the full year due to Trump's tariffs.

In April, during the depths of post-Liberation Day despair, P&G forecast a full-year hit "in the range of $1 billion to $1.5 billion."

PG, among the biggest and best-known consumer staples stocks, hasn't enjoyed much tailwind from its outlook for a smaller tariff impact, though, slipping 3.8% since its July 29 report.

The Consumer Staples Select Sector SPDR Fund (XLP) is up 4.1% since April 7, but is No. 10 among the 11 S&P 500 sectors during that time frame.

Underperformance reflects the simple difficulties confronting businesses with similar internal cost-and-price options as other types of business, but far fewer external megatrend catalysts (AI, for example) to offset those efforts and support margins.

Energy

Like many companies engaged in significant industrial activities, oil and gas exploration and production companies will face higher costs due to a 50% tariff on imported steel and new duties on other inputs for equipment and infrastructure.

Higher steel and aluminum prices will impact energy stocks in multiple industries, including electric, renewable energy and pipeline companies as well as E&Ps such as Chevron (CVX) and Exxon Mobil (XOM).

The Energy Select Sector SPDR Fund (XLE) has added 10.1% since April 7. CVX is up 9.4%, XOM 7.5%.

Financials

JPMorgan Chase (JPM) and other financial stocks will reflect the macroeconomic impact of tariffs, but not so much any specific cost or price pressures.

The Financials Select Sector SPDR Fund (XLF) is up 17% from the April 7 bottom, with JPM stock rising 35.6%.

Health care

Health care involves a lot of pure domestic service, so health care stocks such as UnitedHealth Group (UNH) will continue to move based on traditional fundamental factors and the market's perception of their ability to generate free cash flow for investors.

At the same time, the Health Care Select Sector SPDR Fund (XLV), down 0.6%, is the only one of the 11 S&P 500 sector ETFs with a negative return since April 7, anchored by beleaguered UNH.

And there are nominal health care stocks such as Johnson & Johnson (JNJ), which forecast during its first-quarter conference call $400 million of 2025 tariff impacts but cut that figure to approximately $200 million when it announced second-quarter results.

JNJ stock is up a little more than 12% so far in 2025, but did see a bit of a post-earnings bounce in late July.

Industrials

Not all companies that make and sell big, heavy machinery and other stuff are stalling out under the weight of Trump's tariffs. It's quite the opposite for many industrial stocks.

The Industrials Select Sector SPDR Fund (XLI) is up 27.9% since April 7, good for the No. 2 ranking among the 11 sector ETFs.

Bellwether Caterpillar (CAT) did report lackluster second-quarter results and does expect a $1.3 billion to $1.5 billion tariff hit in 2025. But management also noted the benefits of its exposure to broader trends such as the infrastructure buildout to support the AI revolution.

And 3M (MMM) guided down the full-year per-share impact of tariffs from a range of 20 cents to 40 cents to a net total impact of 10 cents. As Rines says, that "might sound trivial. But the interaction of expecting a larger impact and preparing for it led 3M to guide earnings higher than its pre-tariff (January) expectation."

Not all companies will manage tariffs the way 3M has, but those that offered worst-case guidance should enjoy the direction of travel.

Information technology

The Magnificent 7 are not all strictly tech stocks. Officially, we see TSLA and AMZN with consumer discretionary stocks, NFLX among communication services.

But we do have Apple (AAPL).

CEO Tim Cook said the iPhone maker faces $1.1 billion in additional costs due to tariffs during the current quarter, up from $800 million for its fiscal 2025 third quarter. But that was lower than management's original $900 million estimate.

Apple's exposure to higher tariffs on goods from China is well-known. AAPL stock is up 11.7% since the April 7 post-Liberation Day bottom. The SPDR S&P 500 ETF (SPY) is up 23.6%.

Microsoft (MSFT), meanwhile, must manage costs and inventories but continues to benefit from strong AI-driven revenue growth in its Azure cloud platform.

Indeed, MSFT stock is up 46.7% since April 7 and recently became the second company ever to surpass the $4 trillion market-cap threshold.

The first $4 trillion stock was, of course, Nvidia (NVDA), which is at the center of the AI revolution and is the hub around which "hyperscalers" are spending billions for an infrastructure build-out that continues to show it's a bigger market force than tariffs.

CEO Jensen Huang has courted President Trump publicly and privately, emphasizing the importance of American leadership of the global AI infrastructure build-out. The White House has also eased restrictions on chip exports to China.

Nvidia will report fiscal 2026 second-quarter results after the closing bell on Wednesday, August 27, and we'll find out more about the durability of the trend.

Already, the other six Mag 7 stocks have grown earnings by 26% year over year vs 4% for the rest of the S&P 500.

The Information Technology Select Sector SPDR Fund (XLK) has led the market back from the April 7 bottom with a gain of 40.4%.

Materials

DuPont (DD) continues to demonstrate its one of the best materials stocks to buy.

Management initially forecast a $60 million profit hit in the second half of 2025 due to tariffs related to shipping products to its own operations in China for final completion.

Management has adjusted its supply chains, sought exemptions and implemented surcharges to offset the impact.

And, now, DuPont expects a tariff-related hit of only $20 million, or 4 cents per share, down from 10 cents per share.

And management raised its full-year guidance to $4.40 per share, as broader business conditions offset tariff concerns.

DD stock is up 21.8% year to date, driving the Materials Select Sector SPDR Fund (XLB), which has risen 15.3% since April 7.

Real estate

The Real Estate Select Sector SPDR Fund (XLRE) has posted a total return of 9.6% since April 7, third-worst among the 11 official sectors.

The U.S. real estate market remains stuck due to high interest rates and other factors contributing to affordability, and real estate stocks continue to struggle.

At the same time, the National Association of Homebuilders notes that "tariffs on building materials and home appliances raise the cost of housing, and consumers end up paying for the tariffs in the form of higher home prices and goods."

According to the NAHB, Canada accounts for approximately 85% of U.S. softwood lumber imports, so the increase in tariff rates on Canada from 25% to 35% will have a significant impact on building costs.

Utilities

Like many industrial operators, utilities could face higher costs for energy storage and other heavy equipment. But management teams are sanguine about their contract protections, their ability to manage their supply chains and their long-term planning. And utility stocks are also enjoying an AI bounce.

Indeed, utilities such as Constellation Energy Group (CEG), Duke Energy (DUK) and NextEra Energy (NEE) are not likely to see material financial impacts to their forecasts or their results due to tariffs.

Electricity demand is rising along with spending on AI infrastructure, with more and more computing capacity requiring more and more power.

The Utilities Select Sector SPDR Fund (XLU) has generated a total return of 19.8% since April 7.

Utilities are actually the top-performing sector on a year-to-date basis with a gain of 17.7% through August 1.

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Outsize cuts to the previous two months' worth of jobs data and a rising unemployment rate underscore a weakening in the labor market — and quickly raised expectations for the Fed to resume cutting interest rates sooner rather than later.

Heading into the August 1 release of the monthly jobs report, the odds of a September rate cut were low — falling sharply after the July Fed meeting.

The Federal Open Market Committee (FOMC) chose to keep rates unchanged for a fifth-straight meeting in July. In its policy statement, the central bank's rate-setting committee stated that "the unemployment rate remains low, and labor market conditions remain solid."

The main concern for the Fed was the other side of its dual mandate: a "somewhat elevated" level of inflation, and uncertainty around how President Donald Trump's tariff policies would impact the rate of price growth.

The committee concluded that keeping the federal funds rate at its current range of 4.25% to 4.5% was appropriate to "guard against inflation risks, as Federal Reserve Chair Jerome Powell stated in his July 30 press conference.

However, Powell noted that "there's also a downside risk to the labor market." Specifically, the Fed chair pointed to "a slowing in job creation," as well as "a slowing in the supply of workers."

Powell also said the central bank had "made no decisions about September," and that it needs to see the totality of two months' worth of inflation and employment data before it can make any decision on monetary policy. This sent rate-cut odds plummeting.

On July 31, the day after the July Fed meeting, the chance for a September rate cut stood at 38% — down from 73% the previous week.

How large will the next Fed rate cut be?

At last check, though, CME FedWatch was indicating 85% odds the Federal Reserve will cut rates by a quarter-percentage point (0.25%) at its September 16-17 gathering.

This sharp spike came courtesy of a dismal update on the labor market the morning of August 1. Specifically, the Bureau of Labor Statistics said the U.S. added 73,000 jobs in July, missing economists' estimate for 100,000 new jobs. Figures for May and June were downwardly revised by a collective 258,000.

The unemployment rate also ticked higher to 4.2% from 4.1% in June.

"The downward revisions were the most revealing in this month's job report," says Jeffrey Roach, chief economist for LPL Financial. "As noted earlier, business demand for labor is slowing, adding uncertainty to the growth trajectory for the latter half of this year."

Roach says that given this weakness in the labor market, "investors will recalibrate rate expectations. This solidifies our view that the Fed could cut rates in September."

In addition to a September rate cut, futures traders are now pricing in a 60% chance the Fed will cut by an additional quarter-percentage point in October.

A combined half-point reduction in interest rates this fall would bring the federal funds rate to a range of 3.75% to 4.00%.

CME FedWatch is also showing majority odds for a quarter-point rate cut at the FOMC's December 9-10 meeting (technically, still fall), which would bring the fed funds rate to a range of 3.00 to 3.25% – its lowest level since September 2022.

All this is subject to change — especially when there are several more economic reports due between now and the next Fed meeting.

Why should investors care about interest rates?

The path of interest rates has real-life implications for people — impacting everything from the amount you pay on a car loan to the rate you're charged on your credit card to your retirement planning.

Interest rates have an impact on investors, too. Lower rates tend to boost bond prices — and push bond yields down.

Rate cuts are generally considered good for the stock market.

"Lower interest rates: Stimulate economic growth, which boosts corporate earnings; reduce borrowing costs, which improves profit margins; and make stocks more attractive relative to fixed-income alternatives," writes Kiplinger contributor Charles Lewis Sizemore, CFA, in his feature "How to Invest for a Fall Interest Rate Cut by the Fed."

Tech stocks and small-cap stocks often benefit the most from low interest rates, considering these companies are more reliant on future earnings expectations and can borrow money more cost-effectively when rates fall.

Tactical investors looking for broader exposure should take a closer look at these exchange-traded funds (ETFS) that could benefit from rate cuts later this year.

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Trump secured a trade deal with Japan last week that includes a 15% tariff on Japanese goods. He said of the agreement: "I just signed the largest trade deal in history; I think maybe the largest deal in history with Japan."

The good news, at least for Japanese automakers, is that the 15% tariffs will cover automobiles and automotive parts, which gives them an edge over other car companies that incur 25% tariffs, particularly for cars and parts made in Canada.

On the other side of the deal, Japan pledges to invest $550 billion in the U.S. to build reliable supply chains in pharmaceuticals and semiconductors, while also purchasing up to $8 billion in agricultural food. Its importers will also pay a 15% reciprocal tariff on supplies.

While leaders from both countries praise this deal, it's still a tariff, which means companies could absorb some of these costs or pass them on to you. Here are five shopping verticals that might become more expensive for you as a result of this trade policy.

Expect to pay more for your next car

If you plan to buy a foreign vehicle made with parts from Japan, you can expect to see some of those extra costs. Even with the lower tariffs imposed, 15% is a substantial fee to pay to import cars overseas. These companies won't eat all the total costs forever.

How much will it cost you to buy a new Toyota, Nissan or Mazda? Prices could increase up to $6,000 for new vehicles, per Kelley Blue Book.

Keep in mind that not only will this affect the sticker price you'll pay, but it also impacts all other facets of owning a car, such as paying more in sales tax, financing, car repairs and insurance.

Certain TVs could become pricier

Some of the most common television brands, such as Sony, Panasonic, Sharp and Hitachi, come from Japan. We're already seeing significant signs of price increases for specific models, though these companies aren't saying it's due to tariffs.

Here's an example:

When Sony released the 65-inch Bravia A80L OLED in 2023, its price was $2,500. The newest model now goes for $3,400, according to Vocal, an increase of $900. This is at a time when Tom's Guide found prices for OLED models were dropping below the $1,000 mark.

That said, there's good news: You can secure an exceptional deal on older models. Here's a Sony OLED for under $1,900, where you'll save $400:

Say cheese: Your next camera could make you smile less

Fujifilm shifted production of its X series cameras from China to Japan because of the economic uncertainty about tariffs. While Japan didn't incur a 51% combined tariff on imported goods as China does, that 15% still means higher costs, at a time when some camera companies are already raising prices.

Digital Photography Review reports that some camera makers have raised prices due to tariffs. Cannon's average price hike was 9.7%, with price increases for models ranging from $100 to $500.

This means if you're looking for a digital camera from Fujifilm, now is the time to capitalize before price increases go into effect:

Your next joy ride might come at a higher cost

Japan has built a reputation for its stylish and nimble motorcycles from brands such as Honda, Yamaha, Suzuki and Kawasaki. Tariffs have hit the motorcycle market hard.

Some dealers report shortages of imported motorcycles, in part due to companies waiting to see how the tariffs play out. That shortage created a buyer's frenzy for older models, while the few newer models increased from $2,000 to $5,000 on average per West Coast Shipping. Expect this trend to continue.

Japanese drinks and food are expected to increase in price

Japan exports all sorts of tasty goodies to the U.S. If you're a fan of Japanese whiskey, sake, green tea and matcha, caviar, sushi and other items, the tariffs will hit your wallet.

While it's hard to determine by how much prices will increase, you can look at the big picture. The Yale Budget Lab found that the overall tariff rate customers pay is 20.2%, the highest it's been since 1911. On average, tariffs will cost the average household $2,700 more than regular expenses for 2025.

Ultimately, the 15% reciprocal tariff reached between Japan and the U.S. is far better than the original 25% proposed. On top of this, Japan's pledge of $550 billion into the U.S. economy to build supply chains in key sectors is a good thing, as it will create jobs.

At the same time, tariffs are still taxes, and someone must pay them. This means you can expect the costs of some of these goods to increase, which means now is the ideal time to secure a deal.

Too bad you can't stock up on fresh sushi.

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According to the Bureau of Labor Statistics, nonfarm payrolls rose by 73,000 in July, missing economists' estimate for 100,000 new jobs. Figures for June were lowered by 133,000 to 14,000, while May's jobs growth was also downwardly revised (by 125,000 to 19,000).

Job gains in July were seen in health care (+55,000) and social assistance (+18,000). However, federal government jobs declined by 12,000, and are now down by 84,000 since January.

The unemployment rate, which is calculated from a separate survey, ticked up to 4.2%.

The data also showed that wage growth was up 0.3% month over month in July and 3.9% year over year.

"Just two days after the conclusion of this month's Fed meeting, suddenly the dual mandate is back on the table," says Chris Zaccarelli, chief investment officer for Northlight Asset Management. "With this morning's payroll miss – and the downward revisions that came with it – the Fed will again need to balance a slowing job market with inflation, which isn't slowing fast enough."

Futures traders have certainly changed their tune on a September rate cut following the July jobs data. According to CME FedWatch, odds that the Fed lowers the federal funds rate by a quarter-percentage point at its next meeting in September have jumped to 76% from 38% one day ago.

Zaccarelli adds that Friday's price action in the market could be ugly "given the confluence of new tariff announcements and more evidence that the job market is slowing."

Longer term, he expects the stock market to "move past this particular report and keep climbing this month."

With the July jobs report now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

Experts' takes on the July jobs report

"The July jobs report officially confirms that the labor market has kicked into a lower gear. Investors will need to recalibrate their views on what is the 'normal' pace of employment growth going forward given the headwinds of lower immigration, an aging demographic and the arrival of DOGE-related layoffs. This payroll report kicks the door wide open for a September rate cut. Although the effects of tariff pass-through still lie ahead, the Fed will not want to wait too long to begin its cutting cycle with the nonfarm payrolls flatlining at 35k on average over the past 3 months and the unemployment rate ticking higher." – Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments

"What had looked like a Teflon labor market showed some scratches this morning, as tariffs continue to work their way through the economy. A Fed that still appeared hesitant to lower rates may see a clearer path to a September cut, especially if data over the next month confirms the trend." – Ellen Zentner, Chief Economic Strategist for Morgan Stanley Wealth Management

"No employment report is 'clean' these days, so the revisions to payroll growth are even more important in analyzing the current U.S. employment situation. Given that, the July report was weak. It supports Fed Governors Waller and Bowman being more right than Powell in calling for immediate rate cuts. The internal battle at the Fed will be must-watch TV over the next six weeks as those fixated with the unemployment report will want to hold rates steady while those focused on payroll growth will clamor for rate cuts." – Jack McIntyre, Portfolio Manager, Brandywine Global

"Today's print drops us below the critical 80K-100K replacement level, flashing warning signs as the labor market cools – the U.S. slowdown is starting to take shape. Importantly, the underlying deterioration is grabbing our attention: cyclical employment has flatlined while falling participation rates are somewhat masking unemployment weakness. While overall levels are not flashing red, the trend is cause for concern. This print is just one number in a week filled with important economic data releases, but the miss directly challenges the Fed's hawkish posture from this week's FOMC meeting." – Alexandra Wilson-Elizondo, Global Co-CIO of Multi-Asset Solutions at Goldman Sachs Asset Management

"The slowdown in the labor market without an outright decline is setting the Federal Reserve up for an ongoing robust debate. FOMC participants could both legitimately argue that the labor market is fine and needs no intervention or that the economy and labor market are operating at below-normal levels due to restrictive monetary policy. Each soft labor market report strengthens this latter argument, supporting the case for the 1-2 rate cuts priced into markets this year." – Jason Pride, Chief of Investment Strategy and Research at Glenmede

"In our view, the Fed will cut this year but less than what the market has been pricing in. Going back to wage pressure, less upside pressure is a key factor the Fed will consider in its decision-making process. The line in the sand for the Fed may be in the 4.5% unemployment rate area. This report syncs with our view that the labor market is likely to decelerate in the coming months/quarters and we continue to look for the unemployment rate to move higher by the end of this year. Our projection calls for a 4.8% unemployment rate by year-end as the economy slows." – Scott Wren, Senior Global Market Strategist at Wells Fargo Investment Institute

"The downward revisions were the most revealing in this month's job report. As noted earlier, business demand for labor is slowing, adding uncertainty to the growth trajectory for the latter half of this year. Given the weakness, investors will recalibrate rate expectations. This solidifies our view that the Fed could cut rates in September." – Jeffrey Roach, Chief Economist for LPL Financial

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The Fed cut the target range for the federal funds rate to 4.00% to 4.25% because of deteriorating incoming labor market conditions, despite Bureau of Economic Analysis showing better-than-expected second-quarter GDP growth.

The government shutdown has stopped the flow of information from the Bureau of Labor Statistics, but reports from private sources continue to confirm a more difficult environment for workers and consumers.

As of October 8, the CME Group's FedWatch tool – which tracks the implied probability of Fed moves based on 30-day fed funds futures – showed a 92.5% probability the Fed will cut by another 25 basis points, or 0.25%, later this month.

Still, inflation remains a major if not primary concern for Fed Chair Jerome Powell as President Donald Trump's tariffs and other policies work their way through the global economy.

Still, the target range for the fed funds rate is likely headed lower by the end of the year. So, what would lower interest rates mean for investors?

Let's break it down.

The Fed (usually) doesn't control long-term interest rates

The Fed's primary monetary policy tool is the federal funds rate – the interest rate at which commercial banks lend excess reserves to one another overnight.

When the Fed adjusts the target range for the fed funds rate, effects ripple across banks and through the economy.

The prime rate, which banks charge their most creditworthy customers, is closely tied to the fed funds rate. And most other loans – credit cards, small business loans, etc. – are priced as a spread above prime.

The Fed can also influence long-term interest rates by buying or selling longer-dated bonds, a strategy known as quantitative easing. But this is less common and generally reserved for emergency conditions, as in the 2008-09 Global Financial Crisis and again during COVID in 2020–21.

No significant bond-buying is expected this year.

What lower interest rates mean for bonds, savings accounts and other income investments

Lower short-term interest rates will likely lead to a steepening yield curve – short-term yields fall while long-term yields rise.

This typically happens because lower rates spur inflation expectations, pushing up long-term yields.

As a result, we can expect savings accounts, money market funds and Treasury bills to offer slightly lower yields.

And longer-term bonds, with maturities of 10 years to 30 years – may become marginally more attractive, potentially offering higher yields.

One important note: We probably won't see much of an effect on fixed-rate mortgages, as these tend to track longer-term interest rates.

How ETFs are doing during the second Trump administration

All else being equal, a more accommodative Fed is generally good for the stock market.

Lower interest rates stimulate economic growth, which boosts corporate earnings; reduce borrowing costs, which improves profit margins; and make stocks more attractive relative to fixed-income alternatives.

An investor might be content to sit in a money market fund yielding 5%. But if that yield drops to 3% or lower, they might be more inclined to take risk in the stock market in search of better returns.

As rates fall, money tends to flow into equities.

Which sectors benefit most from lower interest rates?

In a falling-interest-rate environment, growth stocks – particularly tech, small-caps and other companies dependent on expectations of future earnings – tend to benefit most. This happens for two reasons.

Capital is cheaper, and young, fast-growing companies often rely on external funding. Lower interest rates reduce their cost of capital.

And valuation math favors growth. Lower interest rates increase the present value of future profits, which boosts valuations for companies with long-term earnings potential.

Tech stocks and small-cap stocks as well as other high-growth sectors may get a tailwind when the Fed starts cutting interest rates again.

At the same time, interest rates aren't the only factor to consider when it comes to buying stocks.

The Fed typically cuts rates aggressively when economic conditions are weakening – and that can be bad for stocks overall.

Bottom line: Rate cuts are coming, eventually, and certain sectors may benefit. But stay diversified, manage your risk and don't blindly chase momentum.

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When you zoom in on specific items, the story is more complicated. Overall food inflation might be dipping closer to the Federal Reserve's 2% target, but certain goods are still seeing double-digit inflation. According to the latest CPI data from the Bureau of Labor Statistics, egg prices are up 27.3% year-over-year, while coffee and ground beef are up 16.3% and 10.3%, respectively.

Rates were held steady, as expected, at the July Federal Reserve meeting, which concluded Wednesday.

Now, you might be wondering if there's any hope for an upcoming cut in the federal funds rate, and if a cut would bring grocery prices down. Here's a breakdown of the relationship between interest rates and food prices, along with a more in-depth look at why prices are so high and the future outlook for your grocery bill.

Does the federal interest rate impact grocery prices?

What impact, if any, federal interest rates have on grocery prices is tricky to pinpoint. The basic principle behind how the Federal Reserve works is that interest rates control the money supply. When rates are high, money is expensive to borrow, so consumers tighten their belts in an effort to spend only the cash they have on hand and avoid using credit or taking out major loans. When rates are low, the opposite happens.

In theory, then, high interest rates should curb inflation by decreasing demand as consumers spend less. In reality, the actual impact the federal funds rate has on inflation varies depending on the market you're talking about and the underlying causes of inflation.

In the case of groceries, the impact is, at best, subtle and indirect. No matter how expensive money is to borrow and no matter how high grocery prices get, people need to eat. While there are ways to save on groceries by shopping sales or opting for generic alternatives to name-brand products, there's only so much cost-cutting you can do here because you still have to eat.

That's led to a somewhat disturbing trend of more and more shoppers turning to buy now, pay later (BNPL) apps and services like Klarna or AfterPay to finance their grocery purchases. A recent LendingTree survey found that 25% of BNPL users are using the short-term loans to pay for groceries, citing the need to "bridge" the gap from one paycheck to the next.

On the business side, interest rates could indirectly affect grocery prices by raising the cost of the money retailers use to pay for inventory. If retailers are hit with higher interest rates on loans and credit used to keep shelves stocked, they may pass some of those higher costs on to you. But calculating just how much of today's sky-high grocery prices are the result of higher borrowing costs isn't straightforward and will vary from one retailer to the next.

To whatever extent higher borrowing costs are inflating grocery prices, a rate cut might help bring your bill down, assuming retailers choose to pass those savings on to you.

Why are groceries so much more expensive?

Even if interest rates are partly to blame for rising grocery prices, other factors have had a much bigger impact on your bill.

It's also important to keep in mind that while the federal funds rate can impact grocery prices, grocery prices also impact the federal funds rate. The Fed looks to prices and inflation to decide what to do to best help the economy. For example, they raised interest rates in the wake of the pandemic because prices were high.

With that in mind, here are some of the key drivers of past and future inflation on your grocery bill:

• Supply chain disruptions. The pandemic broke down already weak supply chains, creating shortages and sending prices soaring faster than they had since 1979. While things have since stabilized, an FTC report published last year found that retailers have kept their prices high despite no longer facing those same supply chain issues.
• Extreme weather. As the climate warms, searing heat and more frequent natural disasters are decimating crops worldwide. This can create a ripple effect of shortages, impacting not just the cost of that produce item, but any of the packaged foods that use that ingredient.
• Tariffs. It's hard to keep track of what's going on with President Donald Trump's tariffs. But, so far, shoppers have already seen costs go up on certain specialty foods like coffee, chocolate and produce that can't be grown in the United States. Depending on where trade negotiations end up, more foods could see tariff-related price increases or the ones already facing tariffs could become even more expensive.
• Farm worker shortages. One side effect of the Trump administration's immigration crackdown is a shortage of farm workers in the United States. According to the USDA, 42% of farmworkers are undocumented immigrants. With many either deported, detained or too scared to show up to work, crops are going unharvested. This will lead to a combination of food shortages and more dependence on imported crops (which may carry tariffs).

How to save on groceries

You might not have much control over macroeconomic policy or global weather patterns, but there are simple strategies you can use to counteract those soaring grocery bills.

Here are some of the most effective methods to try:

• Join your grocery store's loyalty program. These are often free to join and come with special deals and early alerts to upcoming discounts.
• Use cash back cards with elevated rates for groceries. While no credit card offers enough cash back to make up for the 31% inflation in grocery prices since 2019, some have surprisingly generous rewards, especially on groceries. Earning those rewards helps put some of that money back in your pocket. See our best cash back credit cards of 2025.
• Take advantage of deals to stock up on non-perishable items. If your favorite shelf-stable foods or household essentials are on sale, stock up. Just make sure not to stock up more than you can comfortably store at home.
• Plan meals with overlapping ingredients. You can often save by buying larger quantities of ingredients or at least minimize waste by using up what you've already bought. If you're buying a pound of carrots for a recipe that only needs one, look for another recipe to use up the rest of that bag.
• Join a warehouse club to take advantage of bulk discounts. Costco or Sam's Club are both known for everyday low prices on groceries and household essentials. If you haven't already joined one, do your research and compare the perks and products offered by each. You should also check which one has a location closest to you.

Like everyone else who needs to eat, we'll continue to keep an eye on grocery prices and look for ways to save, while remembering just how many factors go into the price of eggs.

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These quarterly reports to the Securities and Exchange Commission (SEC) require disclosures of buys and sells by institutions that manage more than $100 million, such as mutual funds, hedge funds, pension funds, registered investment advisers and insurance companies.

Berkshire made waves in 2013 with its initial investment in Kraft and its resulting stake in Kraft Heinz (KHC) after a megamerger with peer Heinz. Berkshire's 13F filings when it comes to this particular investment have been remarkably consistent since then.

A decade ago, Berkshire reported 325,634,818 shares of KHC stock. As of its most recent SEC report in May, that figure is exactly the same.

Now, the market is abuzz about a potentially disruptive sale of Berkshire’s KHC stake. Say there's merit to the rumors: Why would Warren Buffett and Berkshire Hathaway want to sell?

What does it mean for BRK.B and KHC shareholders if such a big transaction takes place?

Kraft Heinz merger and recent history

Heinz ketchup was introduced in 1876, so the roots of this company go back a long way. The last 15 years of corporate history are particularly relevant to the recent troubles at KHC, however.

In 2012, Kraft Foods spun out its snack food offerings as Mondelez International (MDLZ). The idea was that Oreo cookies and Cadbury chocolates had a more global and growth-oriented footprint than other processed-food staples in the product portfolio.

Mondelez was actually the bulk of the operations at the time, valued at about $36 billion compared with the $19 billion staples arm that was left as Kraft.

In 2013, Warren Buffett and Berkshire Hathaway partnered with 3G Capital Management to buy the whole of H.J. Heinz for $23.3 billion and took the firm private.

The initial Buffett-Berkshire stake was nearly $10 billion, adding up to about 325 million shares.

In 2015, Kraft and Heinz were mashed up in a $45 billion merger. The deal resulted in a combined debt load of approximately $33 billion at the new entity.

Management cut the dividend, reduced spending on product development and eschewed general long-term planning.

Consumers were already skeptical of legacy packaged foods, and investors were eager for exciting growth stories. As Main Street abandoned its products, Wall Street gave up on KHC.

Berkshire's initial stake remains unchanged at roughly 325 million shares, however, making it a rare constant during this tumultuous period.

Will Buffett and Berkshire sell Kraft Heinz?

Berkshire has accumulated dividends on its shares along the way. But from a share-appreciation perspective, the deal has been a dud.

The combined KHC began trading around $46 post-merger but closed at $28.78 July 24, a loss of more than 37%. Worse, KHC stock is down a nasty 70% from its short-lived high in 2017.

Given this underperformance — and with Warren Buffett set to step down as CEO of the holding company at the end of the year — it seems natural for Berkshire to consider closing the books on the past and looking to the future.

Besides, Berkshire's investment thesis has prioritized income-generating stocks that offer strong cash flow, and KHC clearly doesn’t fit that mold. Not only did Kraft Heinz execute a 2019 dividend cut, it remains bloated with $20 billion in remaining debt that causes a persistent drag on finances.

On top of that, the most glaring proof that an exit might be forthcoming is that Berkshire representatives have quit the Kraft Heinz board.

With a massive stake that's more than a quarter of all shares, however, any exit won't be easy. That’s where some financial engineering — including a breakup of Kraft and Heinz — could come in.

Berkshire’s departing board members have publicly admitted pushing for merger-and-acquisition explorations recently, and such a deal could provide built-in purchasing power through restructuring and assistance from institutional buyers.

Smaller divestitures have happened at Berkshire, including a recent deal to sell its infant and specialty food division to NewPrinces, a top food producer in the region.

But recent challenges seem to be structural and demand a big move.

Buffet, Berkshire and what's next for KHC stock

Berkshire could theoretically muddle through in the face of all this. But as the recent rumor mill seems to indicate, it’s more likely they'll use any retransformation at KHC as an opportunity to cut and run.

For those who want context on what might happen, it's worth looking back at how previous stocks performed after Berkshire Hathaway sold off a significant stake.

In May, Berkshire announced it sold some 14 million shares of Citigroup (C), according to its 13F filing. To be clear, this transaction was announced in May but occurred across the January 1-to-March 31 reporting period.

However you slice it, those 14 million shares didn't hold back C stock, which has rallied nearly 35% in 2025.

Just as noteworthy is that the average volume for Citigroup is almost exactly the same amount at 14 million shares daily. In other words, Berkshire could have satisfied all market demand for one session if no one else on the planet sold a single share of Citi.

Unfortunately daily volume in KHC is also about 14 million shares — meaning the total stake adds up to more than a month of trading volume rather than just a single day.

Berkshire doesn't have to dump all its shares at once. However, a slow bleed of selling could provide a public signal that causes other investors to sell, creating a negative feedback loop that punishes shares.

Berkshire's next 13F reporting date is August 14, and it will be closely watched. The bottom line is a stake such as this is hard to get rid of without making waves.

Which, of course, is why Berkshire might be so eager for an alternative arrangement alongside a merger, breakup or other structural change.

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The Federal Open Market Committee (FOMC) did not cut interest rates this time around, as expected, despite President Donald Trump's repeated calls for Federal Reserve Chair Jerome Powell to lower the federal funds rate.

And, more recently, "these comments have broadened from focusing on interest rates to calls for Chair Powell to resign over the handling of the ongoing $2.5 billion renovation of the Fed's headquarters," says UBS Global Research economist Abigail Watt.

This certainly made Powell's press conference a must-see event as Wall Street, though the Fed chair failed to give any confirmation on a September rate cut – and he refused to offer up any response toward Trump's increasingly combative commentary.

The Kiplinger team reported live on the July Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy. Scroll for all the updates.

How Does the Federal Reserve Work? | Who Will Replace Jerome Powell as Fed Chair? | How the Federal Reserve Affects Mortgage Rates – and What It Means for Homebuyers in 2025

President Trump's tariff policies are beginning to have a slight impact on inflation

Inflation picked up in June, according to the Bureau of Labor Statistics. The Consumer Price Index (CPI) was up 0.3% month over month in June, faster than May's 0.1% increase. The CPI was 2.7% higher year over year, an uptick from the 2.4% rise seen the month prior.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.2% month over month and 2.9% year over year, exceeding May's readings.

The June CPI report "confirms what many have been warning: tariffs are potentially moderately inflationary, and they're beginning to show up in consumer prices," says Matt Mena, crypto research strategist at 21Shares.

But Mena says we'll need to see more data points to confirm this trend.

As for future rate cuts, the strategist notes that the central bank has been preparing for a pivot, but the CPI report "complicates the picture," and the hotter headline figure "could give the Fed pause on cutting rates too soon."

As of June 24, CME Group's FedWatch shows that futures traders are pricing in a quarter-point rate cut in September and another in December.

- Karee Venema

Fed meeting schedule for 2025

The next Fed meeting, which runs from July 29 to July 30, marks the fifth gathering of 2025. That means there are three more to go.

"The committee meets eight times a year, or about once every six weeks," writes Kiplinger contributor Dan Burrows in his feature, "When Is the Next Fed Meeting?".

The Federal Open Market Committee "is required to meet at least four times a year and may convene additional meetings if necessary," Burrows adds, noting that "the convention of meeting eight times per year dates back to the market stresses of 1981."

Fed meetings last two days and wrap up with the release of a policy decision at 2 pm Eastern Standard Time. This is typically followed by the Fed chair's press conference at 2:30 pm.

Here is the full Fed meeting schedule for 2025:

• January 28 to 29
• March 18 to 19
• May 6 to 7
• June 17 to 18
• July 29 to 30
• September 16 to 17
• October 28 to 29
• December 9 to 10

- Karee Venema

The Federal Reserve is not likely to cut short-term rates until closer to the end of 2025

Federal Reserve Chair Jerome Powell has emphasized that the Fed won't cut interest rates until it has a better understanding of how higher tariffs affect longer-term inflation expectations.

And because price effects from tariffs take time to work through the supply chain to the consumer, it's not likely that it will be soon.

Tariffs have only had a small impact on inflation so far. But Powell has noted that professional forecasters believe tariffs will raise inflation this year, at least temporarily.

There's a danger that these price increases could affect longer-term inflation expectations. As a result, Powell feels that it is necessary to maintain a moderately restrictive monetary policy, as the Fed has been doing.

Complicating matters for Powell is that cutting rates now could create market perceptions that the Fed is being unduly influenced by the White House.

The Fed's next policy decision will be released the afternoon of Wednesday, July 30.

- David Payne

Trump heads to the Fed building

President Trump is taking a site tour of the Federal Reserve building in Washington, D.C., this afternoon amid criticism of the central bank's handling of its renovation of the facilities. Specifically, the cost of the improvements is now at $2.5 billion, which is notably higher than the initial $1.9 billion price tag.

As UBS economist Abigail Watt explains, "The renovations first came up in the Chair's semiannual testimony to Congress in June with [Republican] Senator [Tim] Scott of South Carolina calling the renovations 'luxury upgrades that feel more like they belong in the Palace of Versailles.'"

The White House quickly joined the condemnation of the cost of these improvements and used this as example of how Powell is mishandling his duties. Indeed, when asked by a reporter earlier this month if the increased cost is a fireable offense, President Trump said, "I think it sort of is."

The Supreme Court indicated earlier this year that members of the Federal Reserve's board of governors or the Federal Open Market Committee could only be removed "for cause."

Powell has denied any wrongdoing and in a letter to Russell Vought, director of the Office of Management and Budget, noted that the Fed has "taken great care to ensure the project is carefully overseen since it was first approved by the Board in 2017."

- Karee Venema

The labor market is holding steady

The Federal Reserve has a dual mandate of price stability and maximum employment – and both sides appear to be on solid footing at the moment.

While the most recent CPI report showed a slight acceleration in inflation, the data were in line with economists' expectations.

And the June jobs report confirmed a still-healthy labor market. According to the Bureau of Labor Statistics, nonfarm payrolls rose by 147,000 in June, which was a bit higher than May's upwardly revised 144,000 figure and more than the 110,000 new jobs economists expected.

The unemployment rate ticked lower to 4.1%.

The next jobs report won't be released until the Friday after the Fed meeting, but this morning's release of initial jobless claims was more of the same.

Specifically, the Labor Department said first-time unemployment claims fell by 4,000 to 217,000 in the week ending July 18. Economists expected claims to rise by 6,000 to 227,000.

"Although markets are likely already looking ahead to next week's monthly employment data, today's jobless claims total paints a familiar picture – there are still few signs of major cracks in the labor market," says Chris Larkin, managing director of Trading and Investing at E*TRADE from Morgan Stanley.

Larkin adds that if this trend remains intact, the Fed has one less reason to cut interest rates.

- Karee Venema

Home sales data disappoints

New home sales were up 0.6% month over month in June to a seasonally adjusted annual rate of 672,000, according to the Census Bureau. This was below the 649,000 economists expected.

"The slight gain, which follows a sharp contraction in May, reflects weak buyer demand resulting from challenging affordability conditions and heightened economic uncertainty," says Charlie Dougherty, senior economist at Wells Fargo.

The average sales price of a new home sold fell 2% from May to June to $501,000, but was 1.1% higher on a year-over-year basis.

This is just the latest disappointing reading on the housing market. On Wednesday, the National Association of Realtors (NAR) said that existing home sales were down 2.7% from May to June to a seasonally adjusted annual rate of 3.93 million. Economists expected 4.01 million.

"High mortgage rates are causing home sales to remain stuck at cyclical lows," said NAR Chief Economist Lawrence Yun. "If the average mortgage rates were to decline to 6%, our scenario analysis suggests an additional 160,000 renters becoming first-time homeowners and elevated sales activity from existing homeowners."

President Trump, meanwhile, used the housing data to issue a swipe at the Fed chair. "Housing in our Country is lagging because Jerome 'Too Late' Powell refuses to lower Interest Rates," Trump wrote in a Wednesday morning post on Truth Social. "Our Rate should be three points lower than they are, saving us $1 Trillion per year (as a Country). This stubborn guy at the Fed just doesn't get it – Never did, and never will."

- Karee Venema

ECB holds rates steady

On Thursday, the European Central Bank (ECB) concluded its July policy meeting by holding its deposit rate steady at 2%.

This marked the first pause in the ECB's rate-cutting campaign that began last year when its key interest rate was at a record high of 4%.

"The environment remains exceptionally uncertain, especially because of trade disputes," the European Central Bank wrote in its policy statement.

The European Union and the U.S. are currently undergoing trade negotiations. The EU is pushing for 15% tariffs across the board, while President Trump has threatened 30% tariffs on European imports.

On Thursday, all but one EU country (Hungary) voted in favor of retaliatory tariffs that will go into effect on August 7 should the two countries fail to come to an agreement.

- Karee Venema

Um… the CEO said what about the Fed chair?

Your friendly neighborhood super-AI assistant is well aware that, until recently, it was less than rare for CEOs of publicly traded companies beyond the financial services sector – and rare even for heads of banks – to talk in specific terms about who should be and who should not be Federal Reserve chair.

The times they have a-changed, to the tune of President Donald Trump.

Among the non-financial executives to chime in so far, none has played louder notes than Cleveland-Cliffs (CLF) Chairman, President and CEO Lourenco Goncalves.

"Once Chairman Jerome Powell is gone," Goncalves said at the climax of his company's second-quarter conference call, "and that is not a matter of when, not if, and as soon as interest rates come down by 50 or 75 basis points, the automotive sector will take off again."

Goncalves is referring, specifically, to the fact that higher interest rates puts buying cars for many folks out of reach and that lower rates will make automobile purchase more affordable.

"Demand is there, but this Fed chairman will not act," he concluded. "So we need a new Fed chairman appointed as soon as possible."

We continue to track conference calls this earnings season for commentary on Trump vs Powell, and we'll have more soon…

- David Dittman

When does Jerome Powell's term as Fed chair end?

President Trump has not been subtle in his desire to fire Fed Chair Powell.

Earlier this month, stocks went on an intraday roller-coaster ride amid reports that Trump asked several Republican members of the House of Representatives if they thought he could remove Powell from his post.

But the question of whether or not Trump can fire Powell is seemingly moot given that his term as Fed chair is up in less than a year from now – on May 15, 2026.

It's unlikely that those in Trump's inner circle will encourage him to disrupt the status quo – and potentially send stocks and bonds tumbling – when Powell has such a small amount of time left in his term.

For what it's worth, Powell's term as a member of the Board of Governors of the Federal Reserve ends on January 31, 2028.

- Karee Venema

Durable goods orders fall less than expected in June

Durable goods are the lone data point on Friday's economic calendar. According to the Census Bureau, new orders for manufactured goods made to last three years fell 9.3% from May to June to $311.8 billion.

Still, this was better than the 11.3% drop economists expected.

Excluding transportation, new orders were 0.2% higher. Excluding defense, orders were down 9.4%.

June's durable goods decline marks a sharp contrast to May's 16.4% surge, but Priscilla Thiagamoorthy, senior economist at BMO Capital Markets, says "wild swings like this are usually centered around volatile transportation equipment."

In June, transportation equipment orders fell 22.4% – the biggest decline since the onset of the pandemic – "as Boeing (BA) bookings took a nosedive," she adds.

The bottom line, according to Thiagamoorthy, is that the "the decline in nondefense capital goods bookings suggests a weaker handoff for Q3 business investment after robust gains earlier this year."

- Karee Venema

Wall Street has a lot to look forward to during Fed week

"Next week is a bit like the Super Bowl, World Series, and Stanley Cup all rolled together," says Scott Helfstein, head of investment strategy at Global X.

In addition to the Fed decision, the economic calendar features the first reading on second-quarter gross domestic product (GDP), the Personal Consumption Expenditures (PCE) Price Index – the central bank's preferred measure of inflation – and the July jobs report.

"That will be a lot for markets to process in a short window," Helfstein notes.

As for the economy, Helfstein says that it looks strong by most metrics, though next week's data will provide key updates. "Growth may well come in above forecasts that built in drag from tariffs yet to really materialize. Meanwhile, job growth is slowing but has also consistently beat expectations."

As for the Fed, Helfstein says that Chair Powell "has signaled an intent to hold rates steady and wait for more data," and there's little reason to believe the central bank will shift from this strategy.

"They can be patient, and there is a lot of data coming in," he concludes.

- Karee Venema

Who votes on Fed policy?

The Federal Open Market Committee, or FOMC, is the Federal Reserve's policy-setting group. It has 12 members, eight permanent and four who rotate each year.

The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed.

Four regional Fed presidents are rotated in each calendar year.

The 2025 FOMC voting committee consists of:

• Fed Chair Jerome Powell
• Vice Chair Philip Jefferson
• Fed Governor Michael Barr
• Fed Governor Michelle Bowman
• Fed Governor Lisa Cook
• Fed Governor Adriana Kugler
• Fed Governor Christopher Waller
• New York Fed President John Williams
• Boston Fed President Susan Collins
• Chicago Fed President Austan Goolsbee
• St. Louis Fed President Alberto Musalem
• Kansas City Fed President Jeffrey Schmid

In 2026, the presidents from Cleveland, Philadelphia, Dallas and Minneapolis will rotate in as FOMC voting members, according to the Federal Reserve.

- Karee Venema

Q2 GDP should come in strong ... but don't be fooled

First-quarter GDP came in at -0.5%, marking the first contraction of the U.S. economy since Q1 2022. However, this figure was impacted by a surge in imports as consumers accelerated purchases ahead of Trump's "Liberation Day" tariffs.

This time around, BofA Securities economists think second-quarter gross domestic product will likely arrive 2.3% thanks to "a reversal of the surge in imports due to pre-tariff front loading in Q1."

And while this does "indicate that the weak growth of the first quarter will be reversed," writes David Payne, staff economist at The Kiplinger Letter, in his GDP outlook, investors "shouldn't be fooled by the strength in the second quarter."

A more reasonable view of economic growth, according to Payne, is to average the two numbers from Q1 and Q2 to see the growth rate for the first half.

- Karee Venema

The Fed's independence

President Trump has taken to social media posts and public statements in order to discredit Jerome Powell as Fed chair. And in doing so, he's also undermined the independence of the Fed.

What does that mean, the "independence of the Fed"? LPL Financial Chief Economist Jeffrey Roach defines it as "the ability to pursue their congressional mandate (full employment and stable prices) without outsider influence."

The Fed, Roach observes, "has a representative nature to it, desirous in protecting investors from politicized policy-making."

At the same time, however, "We shouldn’t be surprised that the executive branch is lobbying for lower rates. That's been the case during various administrations from Reagan to Obama."

President Trump still faces a basic mathematical hurdle, even if he gets what he thinks he wants. The Federal Open Market Committee sets interest rates based on a vote of its 12 members. The chair casts one vote.

And, anyway, Roach says, "There is no reason to aggressively cut rates down to one or two percent when inflation is above the Fed’s target, unemployment is low, and the economy is still growing."

Roach concedes the fed funds rate is higher than benchmarks set by several other central banks such as the European Central Bank, and that the Fed has room to cut "a few quarter points" by the end of 2025 if inflation stabilizes.

"But," he adds, "with privilege comes responsibility. The exceptional nature of our economy, the depth of our capital markets, and the safety of our legal structure often warrant a policy rate above international rates."

- David Dittman

The stock market has a "perfect week" ahead of the Fed

Friday marked the end of a "perfect week" for the stock market, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

The S&P 500 opened the week "with a new intraday (6,336.08) and closing high (6,305.60), and continued that path for the entire week, as it went on to set a new closing record on Tuesday, Wednesday, Thursday and Friday (with an intraday high of 6,395.82 and a closing high of 6,388.64)," Silverblatt notes.

Friday's settlement marked the S&P 500's 14th new closing high of the year and the 24th since Election Day.

Silverblatt says the last time the S&P 500 had a "perfect week" was in November 2021.

The Nasdaq Composite also closed the week at a new record high (21,108.32), while the Dow Jones Industrial Average, at 44,901.92, sits less than 0.3% below its record high of 45,014.04 from December 4.

- Karee Venema

What could unfold at Powell's press conference

Here are the things to watch for in Fed Chair Powell's press conference at 2:30 pm EST on July 30:

• If Powell emphasizes the risk of a tariff pass-through to inflation expectations, then he could delay a rate cut until late in the year.
• If he focuses on improving or stabilizing services inflation, then he is likely thinking that potential inflation is not as worrisome, and he could be willing to cut short rates at the following policy meeting on September 17.

Powell may talk about both these things, but it all depends on the theme of emphasis he makes in response to the reporters' questions.

And there's the possibility that he doesn't hint at the Fed's direction at all during next week's press conference.

If he chooses, he can tip his hat during his speech on the morning of August 22 at the Jackson Hole conference on monetary policy that the Fed sponsors every year. Last year, Powell chose his Jackson Hole speech to signal an intent to start cutting rates again at the Fed's policy meeting the next month.

- David Payne

What time will the Fed statement be released?

The Federal Open Market Committee will release its updated policy statement at 2 pm Eastern Standard Time on Wednesday, July 30.

"Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace," the FOMC noted in its June policy statement. "The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated."

The central bank also indicated in its June statement that it "will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities."

"This is an important development," wrote Raymond James Chief Economist Eugenio Alemán and Economist Giampiero Fuentes at the time, "because many had expected that the Fed was going to stop the process of reducing the balance sheet during this summer."

- Karee Venema

Dow futures signal positive start to Fed week

Futures on the blue-chip Dow Jones Industrial Average are marginally higher Monday morning, signaling a positive start to Fed week. Futures on the S&P 500 and Nasdaq are also in the green.

Lifting sentiment is news that the U.S. has reached a trade deal with the European Union, which will impose a 15% tariff on most goods sent to the U.S., including automobiles.

"The E.U.-U.S. trade deal removes a significant layer of uncertainty from markets, as this is one of the most important trade deals announced since the start of the entire tariff regime a few months ago," says Paul Stanley, chief investment officer of Granite Bay Wealth Management.

Stanley notes that the removal of this uncertainty is a "positive for markets and this deal is a signal to markets that we can soon move on from this issue and focus more on fundamentals."

As for the Fed, he says that while the central bank "is under pressure to cut interest rates, it's clear that this economy has been able to and should continue to be able to withstand the current level of interest rates."

- Karee Venema

The White House presses for rate cuts again

The Trump administration again called for the Federal Reserve to start cutting interest rates sooner rather than later.

On Sunday, Russell Vought, director of the Office of Management and Budget, spoke to CNN's Jake Tapper, saying interest rates should be "dramatically lower" than where they are currently.

"We believe, on a host of fronts, Chairman Powell has been too late," Vought said, adding that President Trump's criticisms of the Fed chair are strictly articulating "the views of the American people."

Vought also noted that Trump has no intention to fire Fed Chair Powell.

Meanwhile, Commerce Secretary Howard Lutnick took to Fox News on Sunday to say it "makes no sense" that rates are paused at current levels.

"The president's bringing in hundreds of billions of dollars, reducing our deficit. How can that not be the underpinning for us having less debt and lowering rates?," Lutnick questioned.

- Karee Venema

It's a busy week for earnings, too

Not only is it a jam-packed week on the economic front, but the earnings calendar is full of high-profile prints too.

Among the noteworthy reports we're tracking are those from Amazon.com (AMZN) and Apple (AAPL), which are both due after Thursday's close.

CFRA Research analyst Arun Sundaram thinks Amazon will beat on both the top and bottom lines for its second quarter amid strength in retail, advertising and Amazon Web Services (AWS).

"That said, we wouldn't be surprised by a cautious Q3 outlook, given ongoing tariff uncertainties and rising Project Kuiper expenses as satellite launches ramp in the second half of 2025," Sundaram adds.

Meanwhile, Morgan Stanley analyst Erik Woodring believes Apple will report solid fiscal third-quarter results.

Woodring feels that strength in the quarter was driven by product sales, "better-than-feared Services growth" and forex tailwinds, but he's keeping a close eye on what's around the corner.

Specifically, while he'd "argue that the setup into June quarter earnings is more positive than negative … any outperformance into earnings is likely to be short-lived until we get clarity" on near-term uncertainties, including tariffs and Apple's AI strategy.

- Karee Venema

The July jobs report will be released after the Fed meeting

The Federal Open Market Committee will get one last look at the labor market ahead of Wednesday's policy decision, with June's Job Openings and Labor Turnover Survey (JOLTS) set to be released Tuesday morning.

Economists are expecting a modest decline in job openings, to 7.35 million from May's 7.77 million.

In his late-June congressional testimony, Fed Chair Powell reiterated that the labor market remains strong.

However, he also noted that if it were to "meaningfully weaken in a way that was concerning," the central bank could be inclined to consider rate cuts sooner rather than later. But this doesn't seem to be a major worry at the moment.

"The June jobs report came in stronger than expected," writes David Payne in the Kiplinger jobs outlook, though noting that "private-sector jobs grew by a more modest 74,000."

Payne points to additional signs of a slowing labor market, including a decline in hours worked and decelerating wage growth.

For the July report, which will be released ahead of the open this Friday, August 1, BofA Securities economists believe 60,000 new jobs were created, with state and local government payrolls dropping after June's spike.

"It is probably too early to see a big impact from immigration policy," the group writes. "But high continuing claims and unfavorable seasonals could be headwinds."

- Karee Venema

Should you buy a long-term CD before the Fed starts cutting rates?

Inflation remains sticky and concerns that President Trump's tariffs will keep it that way have the Federal Reserve on the sidelines when it comes to rate cuts. However, the central bank is expected to resume lowering the federal funds rate this fall.

Higher interest rates in recent years have boosted savings rates and many savings vehicles can still earn you well over 4%, allowing you to outpace inflation and maximize earnings.

Those looking to maximize savings ahead of an expected rate cut have several options, including locking in a long-term CD.

CDs are market-resistant in that they come with fixed interest rates. It means if you choose a five-year CD and the Fed decides to cut interest rates in the future, the rate you have won't change until after your CD matures.

- Sean Jackson

Big bankers on the importance of Fed independence

Lourenco Goncalves, who runs Ohio-based steel manufacturer Cleveland-Cliffs (CLF), went out on a White House-nurtured limb when he said during his company's second-quarter conference call that "we need a new Fed chairman appointed as soon as possible."

Goncalves, who is chairman, president and CEO of CLF, noted that Powell's departure "is a matter of when, not if," which is factually true.

He added that the automotive sector, a key end-market for his company's steel, "will take off again" once he's gone, which is a matter of conjecture.

CEOs of the biggest banks in the U.S. are speaking more broadly in defense of central bank independence rather than invoking any names.

JPMorgan Chase (JPM) Chairman and CEO Jamie Dimon has been the most vocal defender of the institution: "I think the independence of the Fed is absolutely critical. Playing around with the Fed can have adverse consequences, the absolute opposite of what you might be hoping for."

Bank of America (BAC) Chairman and CEO Brian Moynihan has also weighed in. "The Fed is an independent agency," Monynihan said, "and they are meant to be outside the purview of the executive, and Congress. They are called to task, and monitored, and reviewed. The reality is they were set up to be independent."

Citigroup (C) CEO Jane Fraser and Goldman Sachs (GS) Chairman and CEO David Solomon were similarly expansive."The independence of the Federal Reserve drives its credibility," Fraser said. "It is critical to the effectiveness of our capital markets and US competitiveness."

Solomon underscored the global significance of the issue: "I think central bank independence, not just here in the United States but around the world, has served us incredibly well."

I think central bank independence, Fed independence, is very important and it’s something we should fight to preserve."

- David Dittman

The rate cut trend

Ninety-seven-point-nine is not 100%, but with a little more than 48 hours to go until decision-time, it's hard to imagine what could happen to change as many minds of voting members of the Federal Open Market Committee as would be necessary to effect an interest rate cut at this week's meeting.

People will be watching for changes in the vote totals, however, with an eye on the September FOMC meeting.

FedWatch currently shows a 63% probability that Powell and company will cut the federal funds target range by 25 basis points at its meeting after this one.

Those odds were 74.8% as of June 27 and declined to 56% on July 21. They climbed back up to 61.9% Friday.

The recent uptick may or may not reflect the impact of President Trump's campaign for lower interest rates.

Fed Governor Christopher Waller, who has explained his concern for the underlying health of the labor market in multiple public forums, is likely to dissent from a vote to hold the fed funds target range at 4.25% to 4.50%.

Waller has been mentioned as a potential successor to Fed Chair Powell.

- David Dittman

Where are all the Fed speakers right now?

The Fed-speak is non-existent right now. That's by design. And, setting aside arguments about correlation vs causation, markets are behaving well in the silence.

Since Saturday, July 19, and until Thursday, July 31, participants in the FOMC meeting have been bound by a Federal Reserve policy that limits the extent they can talk about the economy and interest rates.

These two-week "blackout periods" begin the second Saturday that falls 10 days before the next FOMC meeting and end the Thursday that follows the meeting. The Fed's blackout period was an unofficial practice that began in the 1980s until it was formalized in 2011. And it was reaffirmed in January.

Fed-watchers see the policy as a measure against corruption and the potential for information leaks to distort markets. It also provides cover for open discussion during the Fed's most intense periods of policy-making.

Here is a schedule for all blackout periods through January 2027.

During the current quiet period, the S&P 500 is up 1.3%, the Dow Jones Industrial Average 1.0% and the Nasdaq Composite 1.2%.

- David Dittman

Stocks end mixed after EU-U.S. trade deal

The European Union and the U.S. on Sunday agreed to set a 15% tariff on most goods that the EU exports to the United States, including cars and pharmaceuticals. The agreement also stipulates that the European Union buy $750 billion of U.S. energy and invest an additional $600 billion in the United States.

While a zero-percent tariff on a number of goods, including aircraft and semiconductor equipment, was also part of the agreement, adjustments to the current 50% tariff on steel and aluminum imports were not.

The announcement follows recent news of trade deals with Japan, the Philippines and Indonesia.

"We believe the trade deals settled on thus far can benefit American companies in the long run," says Megan Horneman, chief investment officer at Verdence Capital Advisors. But in the near term, she warns that tariffs "threaten margins, potentially inflation and elevated multiples."

Horneman says that the stock market appears to be phasing out any tariff threat and is instead focusing on a strong start to earnings season.

As for today's market moves, the Nasdaq Composite closed up 0.3% at 21,178, while the S&P 500 added 0.02% to end at 6,389.

The Dow Jones Industrial Average slipped 0.1% at 44,837 on weakness in insurance giant Travelers Companies (TRV) and paint maker Sherwin-Williams (SHW).

- Karee Venema

Futures indicate a positive open

Futures for the three main equity market indexes pointed higher a little less than an hour before the opening bell at the New York Stock Exchange.

The S&P 500 is working on a streak of six consecutive new closing highs and has now made 15 new all-time highs so far in 2025.

The Nasdaq Composite also posted a record closing high Monday. The Dow Jones Industrial Average is 176.48 points, or 0.4%, away from its own new high.

The 2-year U.S. Treasury yield was down to 3.906% from 3.922% Monday. The 10-year U.S. Treasury yield was lower too, 4.386% vs 4.42%, as was the 30-year, 4.924% vs 4.965%.

Is the Fed still sorting pandemic fallout?

"Downtown" Josh Brown is not just a CNBC icon. He's one of the original stock market bloggers, he's a podcasting powerhouse, and he's the CEO of Ritholtz Wealth Management, one of the fastest-growing registered investment advisory firms in the U.S.

During a recent episode of The Compound and Friends, which he co-hosts with RWM Managing Partner Michael Batnick, Brown did what he's been doing since his Reformed Broker days and shared some plain thoughts on monetary policy.

"I agree with Neil Dutta" of Renaissance Macro Research Brown wrote in a LinkedIn post summarizing his views by quoting the economist:

Trump is not going to fire Powell. He will just be noisy about not firing him. You get rid of Powell, you lose a scapegoat. Let Powell earn the 'too late' moniker.

Powell is not going to resign because legacy protection in his mind involves standing up to the White House.

"He's probably right," Brown added. And here's the kicker:

Also, no reason not to cut. Lower rates don't create inflation, like it's a magic trick. Inflation comes from supply shocks and people getting so much fiscal assistance they can all quit their jobs en masse, sitting around doing nothing. it doesn't come from a Fed Funds rate dropping 50 basis points.

He's referring, of course, to the federal government's response to COVID-19.

More traditional analysts also note pandemic effects and lingering impact on current policy, but find merit in the Fed's wait-and-see approach.

Noting that "one factor adding to the complexity is the post-pandemic impact on economic and financial models," LPL Financial Chief Economist Jeffrey Roach concludes a "more complex macro environment will force the Federal Reserve to maintain its cautious stance on monetary policy for longer than markets originally expected."

Roach cites last week's Leading Economic Index (LEI) release from the Conference Board, which "still points to a deep, imminent recession as of last month" and "is at its lowest since 2015."

The LEI, Roach notes, "has signaled a recession since mid-2022, when businesses were madly raising wages to attract qualified workers and consumers – especially the upper-income – who were wildly spending discretionary dollars on travel, autos, and luxury items."

Roach explains that the LEI "it illustrates the challenging macro environment that the Fed and investors must navigate."

– David Dittman

The labor part of the Fed's dual mandate is "little changed"

The monthly Job Openings and Labor Turnover Summary (JOLTS) from the Bureau of Labor Statistics is a source of "fresh data on measures of labor slack that Powell follows closely," according to Deutsche Bank U.S. Economist Amy Yang.

The BLS said Tuesday that job openings were "little changed" in June at 7.4 million.

Hires and total separations were "little changed" too, at 5.2 million and 5.1 million, respectively. Quits were "little changed" at 3.1 million, though layoffs and discharges were "unchanged" at 1.6 million.

May openings were revised down by 57,000 to 7.7 million. Hires were also revised down, by 38,000 to 5.5 million, and so were total separations, by

29,000 to 5.2 million. Quits were revised down by 23,000 to 3.3 million, but layoffs and discharges were revised up by 10,000 to 1.6 million.

"Barring a meaningful drop off in the private sector hiring rate and/or notable increase in the layoff rate," Yang writes, "Powell (and the FOMC) should have more confidence in continuing to describe the labor market as 'solid.'"

– David Dittman

And still stocks (are mostly on the) rise

There is so much happening right now – the next Fed meeting is underway, the earnings calendar is as full as it's going to be all year, and President Donald Trump's most recent tariffs deadline is Friday – and yet markets continue to maintain an even strain.

Some day down the road people with responsibility a lot greater than the maintenance of a live Fed blog will unpack the resilience of the stock market in particular since Liberation Day, which now roughly marks the start of one of the fastest, highest rallies ever.

Indeed, the Cboe Volatility Index (VIX), known far and wide as the market's "fear index," spiked some before noon Tuesday but remains well within its "normal" range of 12 to 20 – and far from the 60.13 April 7 intraday post-Liberation Day peak. Retreat from that fear has been historic too.

The stock market is still, at least in theory, a mechanism to price the present value of future cash flows, and the numbers continue to suggest there's more to come with this business of President Donald Trump and the impact of his tariffs, despite headlines suggesting all's clear with regard to Europe, for example.

"Uncertainty" is still a good word to describe the status quo, though Procter & Gamble's (PG) price hikes offer some clues as well.

The three main U.S. equity indexes have turned red as of the noon hour at the New York Stock Exchange, and the VIX did see a bit of an intraday spike.

At the same time, if you forecast the indexes would be in all-time-high territory only so far from Liberation Day – and the VIX would be so far from its recent high – you're on a lonely island.

– David Dittman

The Fed will do what Trump wants (cut) but not when he wants (now)

Nick Timiraos of The Wall Street Journal summarized the state of play amid the next Fed meeting (which is underway as of today).

"The Federal Reserve is currently in a fascinating predicament," Timiraos shared in a preview-post on LinkedIn, "grappling with when to resume lowering interest rates. After pausing earlier this year due to inflation fears spurred by President Trump's tariffs, officials are now divided into (approximately) three camps."

Under the WSJ link (which we've unlocked for you), we learn Fed officials generally agree they'll have to cut eventually. But they're not ready right now.

"The questions dividing them," Timiraos reveals, "center on what evidence they need to see first, and whether waiting for that clarity turns out to be a mistake."

Forward guidance will likely dictate the market's reaction to the Fed

The outcome of a Federal Open Market Committee meeting and Fed chair press conference has the ability to spark volatility in the stock and bond markets.

As just one example, last December, the main stock market indexes declined between 2.6% and 3.6% after Fed Chair Powell warned in his presser that the central bank expected fewer rate cuts in 2025.

This time around, Jordan Rizzuto, managing partner and chief investment officer at GammaRoad Capital Partners, expects "any material market reaction" will "be driven by the Fed's forward guidance, given the lack of significant changes in the economic backdrop" since the June Fed meeting."

Growth measures have not deteriorated further, labor market trends have remained stable, and anticipated inflationary pressures from trade policy have not yet materialized," Rizzuto says. "Additionally, equity market valuations, credit spreads, and dollar weakness do not suggest any immediate signs that financial conditions are too restrictive."

He adds that this makes it "challenging" for the Fed to adjust its wait-and-see approach, though the "proximity to the upcoming annual symposium in Jackson Hole ... provides flexibility to shift guidance should any unexpected events abruptly change the Fed's outlook in the interim."

The 2025 Jackson Hole Economic Policy Symposium will run from August 21 through August 23, with this year's focus on a transitioning labor market.

– Karee Venema

House says no Fed CBDC

The House of Representatives passed three relevant bills during its "Crypto Week" in mid-July, including the GENIUS Act to regulate stablecoins.

President Donald Trump signed the GENIUS Act, which cleared the Senate in June, into law on July 18, four days after bitcoin hit a new all-time high above $123,000.

Bitcoin has moved in a relatively tight range since then and was trading around $117,500 at Tuesday's closing bell, down 0.5% over the preceding 24 hours.

The House also passed the CLARITY Act on digital asset market structure. And it advanced the Anti-CBDC Surveillance State Act, which would ban the Federal Reserve from establishing a central bank digital currency.

According to The Hill, the Senate will consider the CLARITY Act and the CBDC ban when it returns from recess in August.

The Fed addressed the CBDC concept in a January 2022 research paper, Money and Payments: The U.S. Dollar in the Age of Digital Transformation.

"CBDC is defined as a digital liability of the Federal Reserve that is widely available to the general public," researchers explain, noting as well that Federal Reserve notes – or physical "fiat" currency – are the only type of central bank money available to the general public.

They note too that like existing forms of money, a CBDC would enable people to make digital payments.

"As a liability of the Federal Reserve, however, a CBDC would not require mechanisms like deposit insurance to maintain public confidence," they also note, "nor would a CBDC depend on backing by an underlying asset pool to maintain its value. A CBDC would be the safest digital asset available to the general public, with no associated credit or liquidity risk."

Fed officials have acknowledged establishing a CBDC would take at least five years, and Fed Chair Powell has said it won't happen during his tenure, which ends in May 2026.

As The Hill reports, the Anti-CBDC Surveillance State Act would ban the Fed from directly or indirectly issuing a CBDC or studying the issue. President Trump issued an executive order in January that bans executive agencies from pursuing CBDC.

According to the bill's sponsor, Rep. Tom Emmer of Minnesota, CBDC is "government-controlled programmable money that, if designed without the privacy protections of cash … could give the federal government the ability to surveil and restrict Americans’ transactions and monitor every aspect of our daily lives."

– David Dittman

Stocks are down ahead of Fed Day

The S&P 500 was down 0.3%, the Nasdaq Composite lost 0.4%, and the Dow Jones Industrial Average was off 0.5% Tuesday, drifting lower after a light-green open the first day of this week's Fed meeting.

The S&P put up its first negative number after a six-session winning streak. And tech stocks declined from all-time highs with four Magnificent 7 stocks scheduled to report earnings over the next couple of days.

Troubled health care stock UnitedHealth Group (UNH, -7.55) dragged on the Dow, this time because of downbeat guidance instead of a federal investigation of its Medicare Advantage business.

The 2-year U.S. Treasury yield ticked down to 3.871% from 3.922% Monday. The 10-year yield was down to 4.324% from 4.42%, the 30-year to 4.861% from 4.965%.

Price action in the federal funds futures market indicates a 97.9% probability the Fed will hold the target range for its benchmark interest rate at 4.25% to 4.50%, up from 96.9% yesterday.

FedWatch shows a 64.7% probability the Fed cuts by 25 basis points in September, up from 63.1% Monday.

– David Dittman

The U.S. economy was stronger than expected in Q2

The first reading on second-quarter gross domestic product (GDP) came in higher than expected. According to the Bureau of Economic Analysis, the U.S. economy grew at a 3% annualized rate in the three months ending June 30, exceeding economists estimates for 2.5% growth.

"The increase in real GDP in the second quarter primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending," the BEA said. "These movements were partly offset by decreases in investment and exports."

Josh Jamner, senior investment strategy analyst at ClearBridge Investments, says the reading is "messy," and while it came in ahead of estimates, it shows "a slower underlying trend of economic momentum once trade-related distortions are accounted for."

Jamner notes that Q2 GDP "was boosted by a sharp reduction in imports that lifted the headline figure by 5.2%," and marked a reversal of the weak Q1 reading that was pressured by a surge in imports as consumers accelerated purchases ahead of President Trump's early April tariff announcement.

"With that activity having played out, consumers and businesses are retrenching and final sales to private domestic purchasers – a 'core' GDP concept that excludes trade, inventories, and government spending – rose just 1.2%, the weakest reading since late 2022," the analyst says.

Jamner adds that today's GDP reading "implies a stronger core PCE reading tomorrow as well as upward revisions to prior months, which chips away at the case for Fed rate cuts in the near term, pushing Treasury yields higher across the curve this morning."

At last check, the yield on the 2-year Treasury note was up 4.1 basis points at 3.916%, while the yield on the 10-year note was 4.2 basis points higher at 4.37%.

- Karee Venema

Stocks open cautiously higher on Fed day

Stocks opened cautiously higher ahead of this afternoon's FOMC policy statement. At last check, the blue chip Dow Jones Industrial Average was up 0.03%, the broader S&P 500 was 0.07% higher and the tech-heavy Nasdaq Composite had gained 0.2%.

Today's big movers include Palo Alto Networks (PANW), which is down 8% on news it is buying fellow cybersecurity firm CyberArk Software (CYBR, -2%) in a deal valued at around $25 billion, and Marvell Technology (MRVL), which is up 9% after Morgan Stanley analysts lifted their price target on the semiconductor stock to $80 from $73.

- Karee Venema

Potential dissents could mark a first for the Fed in decades

In June, all 12 voting members of the FOMC agreed to keep the federal funds rate at its current range of 4.25% to 4.5%. But the July Fed meeting could mark a break in this consensus.

In recent weeks, Fed Governors Michelle Bowman and Christopher Waller, both President Trump appointees, have said that they are not totally against supporting a rate cut at this month's meeting.

"Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market," Bowman said in a June 23 speech.

And during a July 17 appearance at New York University, Waller said he believes the FOMC should reduce its policy rate by 25 basis points at this month's meeting because any tariff impact will be a one-off increase and the labor markets "looks fine on the surface."

The Fed governor added that when taken together, "the data imply the policy rate should be around neutral, which the median of FOMC participants estimates is 3 percent, and not where we are – 1.25 to 1.50 percentage points above 3 percent."

A dissent by both of these FOMC participants would mark the first time two committee members voted against the consensus since 1993.

- Karee Venema

How about a rate hike…

There is no chance President Donald Trump will nominate William L. Silber, a former member of the Economic Advisory Panel of the Federal Reserve Bank of New York, to replace Fed Chair Jerome Powell or even to serve on the central bank's board of governors.

Silber does raise a provocative argument in an op-ed piece for The Wall Street Journal, though.

"No one on the FOMC knows precisely the appropriate interest rate needed for price stability and maximum employment," Silber writes. "And neither does any Nobel Prize-winning economist."

Silber explains, "The so-called neutral rate of interest is observed in hindsight – by whether the economy is expanding fast enough to keep unemployment low but not too fast to provoke higher inflation."

If we're looking at the incoming data, he deduces, "the current target interest rate of 4.25% to 4.50% seems about right."

At the same time, unemployment is low but inflation is "somewhat elevated," which "suggests, if anything, the target interest rate should be higher to push down inflation."

- David Dittman

Private payrolls come in stronger than expected

Ahead of the Labor Department's release of the monthly jobs report, slated for this Friday morning, ADP this morning said the U.S. added 104,000 private payrolls in July.

This was a notable turnaround from June's revised 23,000 decline in private-sector jobs and well above economists' forecast for 64,000 new positions.

The leisure and hospitality industry added 46,000 new jobs, while construction payrolls increased by 15,000. Only one industry – education and health services – lost jobs in July, according to ADP, shedding 38,000 payrolls.

"Our hiring and pay data are broadly indicative of a healthy economy," says Dr. Nela Richardson, chief economist at ADP. "Employers have grown more optimistic that consumers, the backbone of the economy, will remain resilient."

- Karee Venema

Where to watch Fed Chair Powell's press conference

There are plenty of ways to watch Fed Chair Jerome Powell's post-meeting press conference, which begins today at 2:30 pm EST.

The Federal Reserve Board will feature a live broadcast on its website. It can also be watched on the Federal Reserve's YouTube channel.

Several media sites, including Kiplinger, will also provide direct links to live coverage of the presser.

- Karee Venema

The Fed decision is in

The Federal Reserve kept the federal funds rate unchanged, as expected.

There were two dissenting votes – Governors Michelle Bowman and Christopher Waller – who wanted to lower interest rates by a quarter-percentage point.

The dissenting votes were expected. Waller had made a speech recently arguing that the tariff impact on inflation would be temporary.

- David Payne

What changed in the July FOMC statement

Changes to the FOMC's latest policy statement include the following:

Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year. (Previously read: Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace.)

Uncertainty about the economic outlook remains elevated. (Previously read: Uncertainty about the economic outlook has diminished but remains elevated.)

- Karee Venema

We'll see updated economic projections at the September Fed meeting

There was no new Fed economy forecast or poll of committee member views this time around, as those are done only every other meeting. These will be offered when the next Fed meeting concludes on September 17.

Outside of today's press conference, Fed Chair Jerome Powell will have a chance to explain his views at the central bank's annual Jackson Hole symposium on monetary policy on August 22. Last year, Chair Powell used his conference speech as an opportunity to signal an intent to start cutting rates.

- David Payne

The relationship between the Fed and grocery prices

Kiplinger personal finance writer Rachael Green says that with the rate held steady, "you might be wondering if there's any hope for an upcoming cut in the federal funds rate, and if a cut would bring grocery prices down."

She broke down the relationship between grocery prices and the Federal Reserve, showing how they play off each other.

Read more: What Federal Interest Rates Mean for Your Grocery Bill

Experts chime in after the July Fed decision

With the July Fed meeting now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the outcome and what it could mean for investors going forward.

"As expected Governors Bowman and Waller were dovish outliers, with the majority of the FOMC instead preferring to wait to learn more about the inflation process over the summer. The next two months data will be pivotal and we see a path to a resumption of the Fed’s easing cycle in the autumn should tariff inflation prove more modest than expected or the labor market show signs of weakness." Ashish Shah, CIO of Public Investing at Goldman Sachs Asset Management

"While the Fed held rates at its July meeting, the two dissents highlight the fracturing view of potential tariff impacts on the economy and inflation. Employment and consumption have both been resilient through the volatile first half of 2025 but have shown signs of broader softening. While inflation data is still in the driver's seat of the Fed's dual mandate, employment will likely begin to take on more focus following the implementation of tariffs on August 1st, and as the economy begins to settle into its new normal." – Ryan Weldon, Investment Director, Portfolio Manager at IFM Investors

""The odds are increasing for a September rate cut as the range of economic outcomes for trade negotiations narrows as more deals are finalized. There are still several consequential trade agreements outstanding, but markets were largely unfazed by the August 1 deadline announcement. It appears markets have digested and are now comfortable in the short term with a baseline tariff of 15-20% for most countries." Ross Bramwell, Principal at Homrich Berg

"The Fed did highlight that economic growth had moderated in the first half of the year, and that may open the door to a September rate cut. We continue to see strong corporate fundamentals and consumer spending into the next quarter, so the full year economic growth estimate may be too low. Today’s strong nominal growth may trigger a revision in the coming weeks." – Scott Helfstein, Head of Investment Strategy at Global X

- Karee Venema

Powell won't commit to a September rate cut

In his opening statement, Chair Powell indicated that the Fed is still in wait-and-see mode on whether an interest rate cut is appropriate.

A major concern is whether new tariffs will push up prices on an ongoing basis, or just result in a one-time rise. He said more time is needed to judge which way this could go.

Asked point-blank if it's likely that the Fed will cut its interest rate at its next meeting in September, Powell demurred. He noted that current economic conditions don't indicate that the present level of interest rates is holding back economic activity, which suggests he is not in a rush to cut at the next meeting.

But he emphasized that no decision has been made about what to do at the next meeting.

- Jim Patterson

The Fed is waiting to see where tariffs settle

When asked if the Fed had enough information about the possible impact of tariffs now that a few trade negotiations have settled in the last week, Powell acknowledged "it's been a very dynamic time for these trade negotiations" but affirmed "we're still a ways away from seeing where things settle down."

"We are learning more and more. It doesn't feel like we're at the end of that process, and it's not for us to judge. It feels like there's much more to judge for us looking ahead," he said.

- David Payne

Powell talks about how tariffs are impacting consumer prices

Asked about the impact of new tariffs on consumer prices, Powell emphasized that it will take a long time to understand how that process will work. So far, he noted, importers are absorbing most of the costs and trying to avoid passing along price increases to consumers.

But he also said that companies have indicated that they intend to do that over time, if they can raise their prices without hurting their sales. Absent this puzzle, Powell said the Fed might well be cutting interest rates by now.

Instead, they need to see more data on how fast and how much retail prices rise due to tariffs, which calls for being cautious about cutting rates.

- David Payne

Powell on the 'big, beautiful' bill

Powell said he does not see the so-called "big, beautiful bill" that passed earlier this month as particularly stimulative.

He emphasized that the government's fiscal impact is not part of their mandate, so he won't oppose deficit spending or lower rates to save the government money.

- David Payne

Stocks edge lower as Powell speaks

The main equity indexes have all moved cautiously lower amid Fed Chair Powell's press conference.

At last check, the Dow Jones Industrial Average is down 0.5%, the S&P 500 is off 0.3%, and the Nasdaq Composite is down 0.1%.

Bond yields keep climbing, though. The yield on the 2-year note was last seen up 5.9 basis points at 3.934% and the yield on the 10-year Treasury is 4.8 basis points higher at 4.376%.

What it will take for the Fed to lower rates?

Reporters were eager to hear from Powell what specific economic data could trigger the Fed to cut interest rates.

Powell wouldn't give any specific triggers, but emphasized that what he and his colleagues need to see is a better balance of its twin mandate, which is to maximize employment and hold inflation near 2%.

Right now, inflation remains above target, while the unemployment rate is very low. Reading between the lines, it sounds like Powell wants a combination of lower inflation and signs of weakening in the labor market to justify a rate cut.

- Jim Patterson

Powell says the consumer is still in good shape

Judging by recent trends in consumer spending and credit card data, Powell said he thinks the American consumer is still in good shape, overall.

Spending has slowed recently, but from very high levels in recent years, which doesn't appear to worry him.

The health of the consumer depends heavily on the labor market, where Powell sees hiring decreasing but unemployment continuing at a low level. This bears close watching, he noted, but for now, there is no obvious sign of trouble for the labor market. And that should keep household finances reasonably sound.

- David Payne

Powell asked about staying on the board of governors after his term is up

Powell was asked if he had any updates on plans to remain on the FOMC's board of governors once his term as chair is up next May.

"Sorry, I do not have any update for you," Powell said.

The Fed will remain data-dependent in the lead-up to September

"We're going to need to see the data, and it can go in many different directions," Powell said, when pressed for what specific data points could prompt a rate cut in September.

There will be two more jobs reports and two more inflation reports between now and that next Fed meeting, which suggests that investors will have a lot of tea leaves to read as they try to guess what Powell and his colleagues will do in September.

- Jim Patterson

September rate cut expectations fall after FOMC meeting today

What are the odds the Fed will cut rates in September? Lower than they were yesterday, according to CME FedWatch.

The tool, which tracks the probabilities of changes to interest rates as implied by 30-day fed funds futures prices, currently shows the chance of a September rate cut at 47.1%, down from 63.3% yesterday and 75.4% one month ago.

The odds the Fed keeps rates steady at its next meeting jumped to 51.9% Wednesday from 35.4% on Tuesday and 5.3% one month ago.

Futures traders have instead shifted rate-cut expectations to the Fed's late-October meeting.

- Karee Venema

More experts weigh in after the July Fed meeting

"Despite the hawkish tinge to some of Powell’s comments, I don't think the mindset of most committee members has changed. This is still a data-dependent Fed, and we expect the data to tell them to deliver a cut later this year as unemployment rises modestly and services inflation continues to cool. The expectation for this meeting wasn't a rate cut, and I don't think there would have been much upside to Powell signaling that one was imminent." – Elyse Ausenbaugh, Head of Investment Strategy at J.P. Morgan Wealth Management

"Given that the FOMC is taking August off, Fed officials will have two more months' worth of jobs and CPI reports to digest before it must make its next decision in September. If the Fed judges that tariffs are not having a material impact on inflation and the labor market begins to weaken, this may be the catalyst for rate cuts beginning this fall. However, if inflation starts to pick up, the Fed may opt to remain on hold in an effort to maintain price stability." – Jason Pride, Chief of Investment Strategy and Research at Glenmede

"For crypto, a Fed pivot could serve as a major tailwind. Looser financial conditions and rate cuts have historically fueled risk assets like bitcoin – which has long acted as a sponge for excess liquidity. Bitcoin has tracked global M2 [money supply] with a 2-3 month lag almost to the tick. With cuts likely on the horizon, bitcoin could continue to grind higher, potentially breaking through the $150K mark by year-end and setting its sights on the psychological $200K level." – Matt Mena, Crypto Research Strategist at 21Shares

"To some extent, these dissents [from Governors Waller and Bowman] reflect political jockeying, as Jerome Powell's term as Chair comes to an end next spring. But, we suspect the dissents reflect at least some genuine disagreement among Committee participants as they grapple with the appropriate stance of monetary policy amid the stagflationary impulse from higher tariffs." – Sarah House, Senior Economist at Wells Fargo Economics

- Karee Venema

Markets are mixed on Fed Day

All three main U.S. equity indexes fell from intraday highs to intraday lows as Fed Chair Jerome Powell repeated, underscored, and emphasized the central bank's wait-and-see approach to evaluating the impact of tariffs on inflation and employment.

A hawkish tone from the Fed chair following a better-than-expected GDP report led investors, traders and speculators to pull back their bets on a September rate cut too.

But the Nasdaq Composite caught a late bid and closed up 0.15% at 21,129.67, within 0.23% of the all-time closing high it reached Monday. The tech-heavy index traded up to 21,303.96 intraday Tuesday.

And it looks like strong post-closing-bell earnings reports from Microsoft (MSFT) and Meta Platforms (META) will provide some lift, with MSFT rising more than 7% and META more than 8% early in after-market trading.

Amazon.com (AMZN) and Apple (AAPL) will report earnings after Thursday's closing bell; AMZN was up 2.2% but AAPL was down 0.5% in the after-market.

The S&P 500 was down 0.12% Wednesday to 6,362.90, while the Dow Jones Industrial Average was off 0.38% to 44,461.28. Both indexes are within modest one-day moves of new all-time highs.

The 2-year U.S. Treasury yield ticked up to 3.945% from 3.875% Tuesday. The 10-year yield was at 4.368% vs 4.328%, and the 30-year rose to 4.901% from 4.868%.

Federal funds futures pricing now indicates a 54.9% probability the Fed will hold the target range for its benchmark interest rate at 4.25% to 4.50% following its September meeting, up from 35.4% Tuesday.

– David Dittman

Fed week concludes with another Trump attack on Powell

President Trump issued another criticism of Fed Chair Powell after the July FOMC meeting wrapped up without a rate cut.

"Jerome 'Too Late' Powell has done it again!!! He is TOO LATE, and actually, TOO ANGRY, TOO STUPID, & TOO POLITICAL, to have the job of Fed Chair. He is costing our Country TRILLIONS OF DOLLARS, in addition to one of the most incompetent, or corrupt, renovations of a building(s) in the history of construction! Put another way, 'Too Late' is a TOTAL LOSER, and our Country is paying the price!," Trump posted on his Truth Social account Thursday morning.

Attention now turns to the next Fed meeting, scheduled for September 16-17, where futures traders are currently pricing in another hold. However, with two inflation reports and two jobs reports due out over the next seven weeks, those expectations are sure to change.

Join us in September when we'll be live-blogging all the relevant Fed news. We'll see you then!

- Karee Venema

From Friday, January 17, through Friday, July 18, WFIVX generated a total return of 4.8%. Broadly speaking, then, the stock market is up during the first six months of the second Trump administration.

But most of us experience the stock market at the headline level (especially during the second Trump administration). And the Wilshire 5000, which, as of June 30, included 3,289 publicly traded companies from $50 million micro-caps such as Natural Health Trends (NHTC) to $4 trillion mega-caps such as Nvidia (NVDA), rarely makes headlines. That relatively light 4.8% return doesn't reflect the overall feeling of the market so far in this administration.

The journey looks better in sharper focus: The S&P 500 and the Nasdaq Composite are trading near all-time highs, and the Dow Jones Industrial Average is knocking on a new peak of its own. The S&P 500 has returned 5.7% since January 17, the Nasdaq 6.8% and the Dow 2.9%.

And perhaps only cryptocurrency and bitcoin capture the absolutely risk-on nature of the stock market so far into No. 47's tenure. Crypto is now a $4 trillion market, and bitcoin recently crossed $120,000 for the first time.

As with anything, the numbers alone don't tell the whole story, and growth has not been a straightforward upward climb. So, how is the stock market performing under Donald Trump's second term as president so far? Let's break it down.

The map and the terrain of the stock market under Trump

To simply say the stock market is up during the first six months of the second Trump administration doesn't show you very much beyond the basic trajectory from point A to point B. It is, as they say, the difference between the "map" and the "terrain." It avoids discussion of the historic volatility and market-moving uncertainty since Trump returned to the White House.

The list of Trump's market-impacting policies includes trade wars and tariffs, immigration crackdowns and labor market stressors, energy security and nuclear power, cryptocurrency regulation and a bitcoin reserve… and real, actual war in Central Europe and the Middle East.

Prices of some assets have moved simply because they're Trump-related, with little more than a general personality trend and some headline-driven momentum supporting them. That's what happens in a bull market – and it has been a bull market six months into the second Trump administration.

The story of stocks' performance under Trump

Let's take a look back at the first Trump presidency. During the first six months of the first go-around, the Wilshire 5000 Index Fund generated a total return of 9.3%. And, before the COVID-19 pandemic sell-off, the main U.S. equity indexes were pushing out to new all-time highs.

Stocks resumed their long-term up-and-to-the-right trajectory within months of the initial February 2020 crash. In fact, returns of 13.6% per year during Trump's first presidency made him one of the best presidents based on stock market performance, between Barack Obama (12.8%) and Bill Clinton (15.0%).

After Trump was elected for a second time last November, investors traded with apparent optimism that we would again see growth. They only hit a stumble in late winter, when DeepSeek temporarily sidetracked the AI Revolution.

Stocks moved sideways until "Liberation Day" on April 2 defined the spring of the second administration – and redefined the Trump Trade. The S&P 500 declined more than 10% over the next two trading sessions, the president's announcement immolating nearly $7 trillion in total stock market value by April 4. After that, Trump paused the tariffs for a period and, since that initial shock, the market has largely grown to the historic heights we're seeing now.

It's also important to appreciate price action beyond equities, primarily in the yield on the 10-year U.S. Treasury note. The 10-year U.S. Treasury yield – a key benchmark for the global financial system and a critical baseline for many big-ticket consumer purchases – has fluctuated as much as the stock market amid tariff-related uncertainty.

The yield on the 10-year hit a 52-week high of 4.896% on January 13, a week before Trump's second inauguration, and traded as low as 3.860% on April 4 before spiking to 4.607% on May 21, then settling at 4.431% on July 18.

Market observers have also questioned the future of the U.S. dollar as the linchpin of the global economic system.

But, with the headline-generating equity indexes at all-time highs, it's fair to say it's a bull market, no matter how exactly we got there.

And, after the last six months, it's hard to see what would bring investors, traders and speculators back to pessimism sufficient enough to sustain a bear market over a meaningful period – other than a major worldwide catastrophe of uncontemplated proportions.

How ETFs are doing during the second Trump administration

All that said, most of us are exposed to the stock market through IRA and 401(k) accounts and index-based exchange-traded and mutual funds, so let's look at that performance.

The Vanguard S&P 500 ETF (VOO) – the biggest of the S&P 500 ETFs – generated a total return of 5.7% from January 17 through July 18, as you might expect given the underlying index's performance. Top holdings include NVDA as well as Microsoft (MSFT) and Apple (AAPL).

Crypto is enjoying a Trump-supported renaissance not yet two decades into its existence, with the best bitcoin ETFs such as the iShares Bitcoin Trust ETF (IBIT) built to capture its full flowering.

IBIT is up 11.8% during the second Trump administration. IBIT has surged on the promise and now the passage and signature into law by President Trump of the first major cryptocurrency legislation in the U.S.

The VanEck Uranium+Nuclear Energy ETF (NLR) – an efficient way to invest in the nuclear revolution – has outperformed VOO (and NVDA, for that matter) since January 17 with a return of 34.2% through July 18. NLR's outperformance is a reaction to four executive orders to accelerate the U.S. nuclear industry signed by President Trump in late May.

Meanwhile, financials are good bellwethers because of their broad and diverse exposure to multiple levels of financial and real-world market activity. That the Financial Select Sector SPDR Fund (XLF) is up 5.3% suggests it's one of the best SPDR ETFs to buy and hold and that it's steady as it goes so far in the second Trump administration.

How stocks are doing during the second Trump administration

At the end of the day, it's a market of stocks. Components drive indexes. Some provide the gas, some provide the brakes.

Nvidia is the gas for the whole stock market – and maybe the entire economy too. NVDA – still tops among the Magnificent 7 – was a $322.5 billion stock on January 19, 2021, the day Trump officially left the White House the first time around.

As of July 18, Nvidia is the most valuable publicly traded company ever at $4.2 trillion. Helped by recent favorable adjustments for semiconductors in Trump's tariffs policy, NVDA stock has risen 25.2% since his return to the White House to a new all-time high as of July 18.

Another large-cap tech stock, Palantir Technologies (PLTR), is the top-performing stock in the S&P 500 since January 17, though following a run of 113.9%, it's earned a place on the list of the riskiest S&P 500 stocks right now. At the same time, PLTR's capabilities demand a premium, similarly reflected in defense stock Howmet Aerospace (HWM) and its 52.2% Trump II gain.

Tesla (TSLA), meanwhile, has enjoyed the ecstasy and the agony of its once-tight but since-frayed ties to the White House. TSLA soared 94.3% to an all-time intraday high of $488.54 after Trump's election, then fell 56.1% when CEO Elon Musk began to question the president about taxes and spending.

TSLA stock has ultimately lost 22.7% since January 17 amid questions about Musk's priorities.

UnitedHealth Group (UNH) has weighed down the Dow Jones Industrial Average in recent months due to foul business practices in its Medicare Advantage unit, erasing 43.9% of its value.

And finally, for the record, Trump Media & Technology (DJT) is down 53.6% since its namesake's inauguration.

Related content

• Ways Portfolios Have Been Impacted In Trump's First Six Months in Office
• 5 Stocks to Buy for a Trump Presidency
• Best and Worst Presidents (According to the Stock Market)
• Best Stocks to Buy Now

The Federal Open Market Committee (FOMC) began its rate-cutting cycle a year ago with a surprise reduction of 50 basis points (50 bps), or half a percentage point, but it's been on hold since December.

A solid labor market and the impact on prices from tariffs have made the FOMC leery of lowering borrowing costs. But a slowdown in hiring and a large downward revision to previous employment data have both economists and the market expecting more dovish monetary policy going forward.

Importantly, the next Fed meeting will also include a Summary of Economic Projections (SEP), also known as the dot plot, which the FOMC releases four times a year.

"This quarterly update offers the Fed’s latest forecasts for GDP growth, unemployment, inflation, and the federal funds rate, providing a window into how policymakers interpret recent economic developments," writes Giampiero Fuentes, economist at Raymond James. "With most tariffs now fully implemented and imports actively taxed, the SEP will likely reflect updated economic projections."

To recap: The FOMC has held the federal funds target rate steady at 4.25% to 4.50% since its December meeting. It left rates unchanged in July, citing sticky inflation, tariff effects and, as always, the need for more data.

As of this writing, market participants expect the Fed to cut short-term rates by 25 basis points (a quarter of a percentage point) three times before year-end, with the first reduction coming later this week.

Indeed, as of September 15, interest rate traders assigned a 96% probability to a quarter-point cut at the next Fed meeting, according to CME Group's FedWatch. That's up from 85% a month ago.

Odds of additional quarter-point reductions at the October and December meetings stood at 74% and 69%, respectively.

With the Fed set to ease at an increasingly complex time, we turned to economists, strategists and other experts for their thoughts on monetary policy going forward. Please see a selection of their commentary, sometimes edited for brevity or clarity, below.

Fed rate cuts: what the experts say

"We expect a 25 bp rate cut at the September FOMC meeting to be the first of three this year. The increase in the unemployment rate over the last two months and the decline in job growth to below the breakeven rate make supporting the labor market the Fed's top priority. We expect 25 bp cuts in September, October and December and two more next year to 3.0% to 3.25%. We do not expect the FOMC statement to nod toward an October cut, but Chair Powell might hint softly at consecutive cuts in his press conference." – David Mericle, Chief U.S. Economist at Goldman Sachs

"We look for the FOMC to cut policy rates by 25 bps. This will resume the rate reduction campaign commenced last September which has been on hold this year. In the Summary of Economic Projections and the 'dot plot,' we look for the median fed funds forecast to show a second quarter-point rate cut for this year (so two in total for 2025, which was the case in June's SEP) and probably three moves for next year (it was only one before). In the press conference, we suspect Powell will spend time explaining why the Fed sided with the output/employment team in this policy tug-of-war." – Michael Gregory, Deputy Chief Economist at BMO Capital Markets

"The Fed has telegraphed a 25 bp cut at its September meeting. Markets will look to the SEP and press conference to assess the pace and extent of cuts going forward. The macro forecasts in the SEP should look very similar to June. We think the 2025 and 2026 median dots will show 50 bps of cuts each. Risks are for 75 bps in 2025. Powell's characterization of the labor slowdown (cyclical or structural?) and inflation (one-off or sticky?) should provide clues on his expected policy path." – Aditya Bhave, U.S. Economist at BofA Global Research

"The focus in this meeting is going to be less on the decision and more the path forward. The SEP and dot plot will be the market's anchor. Given how much dovishness is already priced, any median path that signals fewer cuts or a slower easing cycle in 2026 would read as hawkish. A split vote or dissent (for 50 bps or even a hold) would underscore internal debate and lift uncertainty around the rate trajectory. And with positioning primed for a steady easing cycle, even a neutral press conference from Chair Powell could disappoint markets and nudge equities toward a dovish-to-neutral repricing." – Daniela Sabin Hathorn, Senior Market Analyst at Capital.com

"Comerica forecasts a quarter-percentage point cut at Wednesday's Fed decision. The Fed can be expected to cut rates further in coming months; the question is how much, not if. If Powell reiterates the 'proceed carefully' language he used at Jackson Hole in the post-meeting press conference, it will signal that he favors a pause in rate cuts at the October decision (barring further deterioration in the economic data). It will be worth watching for a gap between the FOMC statement's guidance, which represents the consensus view of all FOMC members, and Chair Powell's own statements in the press conference, which reflect his personal view." – Bill Adams, Chief Economist at Comerica Bank

"The broad-based rise in consumer prices complicates the Fed's policy outlook. Persistent inflation risks may limit the Fed's ability to pursue aggressive rate cuts. Despite this, we continue to expect a 25 basis point rate cut in September, with at least one additional cut likely before year-end. A larger 50 basis point cut appears increasingly unlikely unless Fed officials perceive a significant recession risk." – Eugenio Alemán, Chief Economist at Raymond James

"With the weakening labor market and inflation seemingly under control, we expect a rate cut starting this week and totaling 100 basis points over the next four meetings through January 2026. The Fed now is looking at a significantly softening labor market as a key concern and priority. The stock market's recent gains are being driven by strong earnings momentum and declining rates as the market starts to price-in the Federal Reserve's expected rate cuts. Just because stocks are at record highs, does not mean a pullback is imminent." – Brian Buetel, Managing Director at UBS Wealth Management

"A 25 bp easing this week is highly likely, but the vote probably will be split three ways. Committee members are still divided on whether rising inflation or unemployment is the bigger risk. That discord will rule out clear guidance on future easing, though markets will still price-in a big shift." – Samuel Tombs, Chief U.S. Economist at Pantheon Macroeconomics

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One of China’s most potent trade weapons that it is wielding as the U.S. threatens new tariffs is a near-stranglehold on rare earth elements, a group of obscure minerals that happen to be vital to many high-tech applications and products. It’s not that rare earths are rare, exactly. But they are hard to mine and process. They aren’t evenly distributed across the world. Extracting and refining them is a messy process that can cause a lot of pollution.

China realized this decades ago and decided to exploit its sizable deposits of rare earths, ignoring the environmental damage. Its leaders wanted to corner the market, and they did. Consider the things that require rare earths: Drones. Missiles. Fighter jets. Spacecraft. Wind turbines. Electric cars. AI servers. That’s just a partial list. In general, rare earths are key to the magnets in advanced electric motors. Thus, they are vital for applications like advanced robots.

The U.S. has already eased up on tariffs in response to China’s recent ban on rare earth exports. But Beijing is still slow-walking sales of rare earths to American importers. What’s more, it still does not permit exports of them to U.S. defense contractors. Companies here and abroad are scrambling to lessen their dependence on rare earths where possible, knowing that China could cut off their supplies. BMW, for example, sells EVs whose electric motors don’t use rare earths. Other automakers are trying to do likewise. Japan has stockpiled a year’s worth of rare earths, after it suffered from an earlier Chinese export ban over a decade ago. But that is just a stopgap.

What’s needed is rare-earth mines and processing plants outside of China. Unfortunately, it takes time to open them: Three years, by one estimate. Still, expect a concerted push to reduce the world’s reliance on China. Countries with the most promising deposits: Brazil, South Africa, Namibia and other African nations. Greenland is also believed to have a rich trove of them, one reason President Trump is so keen on acquiring it, but mining may not be doable.

For now, the U.S. has only one functioning mine, called Mountain Pass, in California. New processing plants are a work in progress. One just opened in Malaysia. Australian miner Lynas is building another in Texas, but is waiting for new funding from Uncle Sam. There is also talk of a plant in Nebraska at NioCorp’s Elk Creek deposit. There are two major hurdles to building these plants: First, their wastewater and other toxic by-products generally provoke local opposition. Second, Beijing has positioned China as the main maker of the equipment for processing rare earths.

Ultimately, it’s going to take some political willpower, either in the U.S. or overseas, to support (and likely fund) alternatives to China’s monopoly on supply.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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According to the Bureau of Labor Statistics, headline CPI was up 0.3% month over month in June, faster than May's 0.1% increase but matching the 0.3% increase economists called for.

The CPI was 2.7% higher year over year, an uptick from the 2.4% rise seen the month prior and in line with economists' projections.

Shelter was the "primary factor" for the monthly increase in headline CPI, according to the BLS, up 0.2% from May to June. Energy costs were also on the rise in June, up 0.9% as gas prices jumped 1%.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.2% month over month and 2.9% year over year. Both figures were higher than what was seen in May but in line with economists' forecasts.

"While today's CPI release showed some early signs of tariff impact, on the whole, underlying inflation remained muted," says Kay Haigh, global co-head of Fixed Income and Liquidity Solutions in Goldman Sachs Asset Management.

Haigh warns that price pressures "are expected to strengthen over the summer and the July and August CPI reports will be important hurdles to clear."

While she expects the Fed to remain in wait-and-see mode for the time being, rate cuts could resume this fall if "underlying inflation ... continue to prove benign."

According to CME FedWatch, futures traders are now pricing in a 60% chance the Fed will issue its next quarter-point rate cut at its September meeting, little changed from a week ago. The betting odds are for just one additional rate cut by the end of the year.

As for the next Fed meeting, which kicks off on Tuesday, July 29, and concludes on Wednesday, July 30, it's all but guaranteed that the central bank will hold interest rates steady.

With the June CPI data now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

Experts' takes on the June CPI report

"This data confirms what many have been warning: tariffs are potentially moderately inflationary, and they're beginning to show up in consumer prices. However, we'll likely need a larger sample size to fully confirm this trend. The market is now watching how the Fed will respond. While the central bank has been preparing for a policy pivot, today's report complicates the picture – the softer core print offers some relief, but the hotter headline figure could give the Fed pause on cutting rates too soon. " – Matt Mena, Crypto Research Strategist at 21Shares

"The big question for the inflation picture is tariffs. It's taking some time for tariffs to show up in the data, but it's highly likely that a tariff-driven inflation reckoning is coming. The tariff picture is as murky today as it was in early April, but the only thing that has changed has been the market's reactions to the administration's jostling. We are only just beginning to see tariffs work their way through to consumer prices, and we are bracing for an additional uptick in consumer prices over the coming months." – Skyler Weinand, Chief Investment Officer at Regan Capital

"This was the first of three reports before the September meeting as July cuts seem to be off the table. Today's readings did nothing to change that stance but put the focus squarely on September. Clearly, inflation remains sticky, but it is far from changing course. The continued tariff uncertainty remains just that – uncertain. If the data stays in line with expectations, then 'the one data point at a time' stance the Fed usually follows should take precedence over the uncertainty of tariffs and thus a cut in September." – Jay Woods, Chief Global Strategist at Freedom Capital Markets

"Traders were keeping a close eye on this morning's CPI report and the Fed was probably looking even more closely at it as the internal debate continues into whether or not they should be cutting interest rates right now. If it's true that inflation is staying in check, then the Fed can go ahead and cut interest rates – potentially as early as September – but if subsequent reports show a different story, then the Fed is going to have to stay on hold even longer." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"We expect tariff revenues to continue to trend higher over the next few months. This supports our view that tariff impacts on the economy are still in the pipeline. We expect goods inflation to accelerate, but the biggest question mark is around services inflation, which is sensitive to the health of the labor market. Services inflation has been muted over the past few months thanks to weakness in motor vehicle insurance, housing, and tourism. " – Ryan Sweet, Chief U.S. Economist at Oxford Economics

"This is kind of a perfect inflation report for the Fed, just hot enough to justify their policy of holding rates steady, but not reflective of runaway prices. The question now is whether the labor market holds up throughout summer, and it probably will. If we see strong corporate earnings for the second quarter, growth forecasts for the U.S. may be revised higher." – Scott Helfstein, Head of Investment Strategy at Global X

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According to the Bureau of Labor Statistics, nonfarm payrolls rose by 147,000 in June. This was slightly higher than May's upwardly revised 144,000 figure and more than the 110,000 new jobs economists expected. April jobs growth was also raised, by 11,000.

Job gains in June were seen in state government (+47,000), while health care (+39,000) and social assistance (+19,000) employment trended higher. However, federal government jobs declined by 7,000, and are now down by 69,000 since January.

The unemployment rate, which is calculated from a separate survey, ticked lower to 4.1%.

The data also showed that wage growth was up 0.2% month over month in June and 3.7% year over year.

Today's jobs report defies, "at least for now, the signs of weakness seen in some leading indicators," says Simon Dangoor, head of Fixed Income Macro strategies at Goldman Sachs Asset Management.

The Fed's conviction "that it should hold its wait-and-see stance while it braces for an acceleration in inflation over the summer will only be strengthened," Dangoor adds.

Still, he believes the Fed could resume rate cuts later this year "should the summer acceleration in inflation prove more modest than expected, or the softening in the labor market exceed the relatively low thresholds implied by the dot plot."

According to CME FedWatch, futures traders are pricing in a 93% chance the Fed keeps the federal funds rate unchanged when it meets at the end of this month, up from 76% one day ago. Odds of a September rate cut are currently at 71%.

With the June jobs report now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

Experts' takes on the June jobs report

"The June jobs report continues to demonstrate resilience across the labor market, even as certain sectors such as manufacturing continue to lag. The unemployment rate is holding steady at 4.1 percent, and real average hourly earnings for employees experienced its largest increase of the year. Still, even with a booming stock market, consumers are signaling a softening economy, as consumer confidence fell for the sixth time in seventh months and discretionary spending saw its steepest monthly decline since February 2023." – Joe Gaffoglio, President and CEO at Mutual of America Capital Management

"The solid June jobs report confirms that the labor market remains resolute and slams the door shut on a July rate cut. Today's report saw a trifecta of positives that should send the labor bears back into hibernation: a drop in the unemployment rate, a solid beat on headline job creation vs consensus, and positive revisions to the prior two months. Softer average hourly earnings (wage) gains suggest that a wage-price inflationary spiral shouldn't be a near-term concern, setting up something resembling a goldilocks scenario." – Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments

"These numbers demonstrate economic resilience despite expectations for slowdowns on the backs of tariff and fiscal uncertainty. While many will not want to believe this solidifies a strong labor market, especially on the backs of a negative ADP print, what this print does solidify is that the Fed does not have the data to contemplate a cut in July. Bond markets are, therefore, repricing yields higher, and investors should continue with the mindset of higher for longer." – Lara Castleton, U.S. Head of Portfolio Construction and Strategy at Janus Henderson Investors

"We still expect the Federal Reserve to continue its wait-and-see approach on interest rates, pushing any potential rate cuts into the fourth quarter of this year. We expect the Federal Reserve to cut interest rates twice in 2025, although the timing of it will depend on the next few months' worth of labor market and inflation data. Earnings season begins in mid-July and we will likely hear a more updated view on how companies are navigating the uncertainty from tariffs and if they have been able to resume any paused business projects now that the tariff situation is starting to resolve itself." – David Laut, Chief Investment Officer at Abound Financial

"Given the strong jobs numbers along with the extension of tax cuts and potentially higher tariff levels (once the 90-day pause expires), the Fed is much less likely to cut rates this month than many were talking about earlier this week. Instead, the Fed is likely to wait until later in this quarter or even until the fourth quarter before they cut interest rates. Given that backdrop, the stock market is likely to ignore the greater macroeconomic picture in the short run and focus much more on corporate earnings, which will kick off in less than two weeks." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"The jobs numbers have now delivered better than expected four months in a row. A good labor market with real wage gains will ultimately drive consumer spending. Toss on top the potential $3 trillion stimulus in the big bill. That will continue to drive equity markets higher. With another strong jobs report, the best chance for the White House to influence rates is by following through on the July 9 pledge to increase tariffs on most countries. Investors are not out of the woods yet, and another bout of volatility would not be surprising." – Scott Helfstein, Head of Investment Strategy at Global X

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Will the Trump administration’s tariffs reignite inflation? Will the U.S. economy slide into a recession? Has the U.S. stock market put a spring swoon definitively behind it? The answer to all of the above: We’ll have to wait and see.

That’s always the answer when it comes to forecasting, of course, especially the direction of the market. But the weight of the evidence usually tips the scales one way or another, toward offense or defense — only now, the evidence is still up in the air and shifting almost daily.

“These are interesting times,” says Jody Jonsson, a portfolio manager and vice chair of fund company Capital Group with 38 years of financial industry experience. “What’s happening right now is different than anything I’ve seen in my entire career, a fundamental restructuring of the world order — politically, economically and militarily.”

We don’t know how all of 2025’s known unknowns will resolve. But it’s certain that uncertainty will reign for a while longer.

There are signs that the broad U.S. stock market may have already hit its low, and it closed out the month of April on a hot streak. Yet plenty of skepticism remains about a durable bullish breakout. The market is likely to stay choppy for much of the rest of the year, whipsawed by policy news from the White House and by economic data that will either confirm or contradict the recent abysmal readings on investor sentiment and confidence.

“Everyone craves certainty,” says Keith Lerner, chief market strategist at Truist Wealth. “But in this world, you have to think about what could go right and what could go wrong, and what belongs in your portfolio depending on different outcomes.”

Even if all goes fairly well — that is, if tariffs as proposed now come down as deals are negotiated and the Trump administration turns to traditionally pro-growth tax cuts and deregulatory policies — investors could still wind up at year-end not far from where they finished in 2024.

Dashed hopes

In our January outlook issue, we said an S&P 500 index level between 6300 and 6600 made sense for year-end. At the time, strategists were raising their price targets faster than we could keep up with them, and the mood on Wall Street was euphoric.

But after a tariff-induced tantrum turned a run-of-the-mill market correction into a near-bear experience in April, with the S&P 500 down nearly 19% from its high (20% marks a bear market), Wall Street’s forecasters brought out their markdown pens.

The range of year-end S&P 500 targets is wide — between 5550 and 6600 among analysts we talked to or track. We think somewhere in the middle is a safer bet — say, a level between 5800 and 6000. At the midpoint, that would imply a nearly 6% rise in price from the April 30 close of 5569. (Prices, returns and other data in this story are as of April 30, unless otherwise noted.)

That would still be down some 4% from the market’s February high, and essentially flat compared with 2024’s close. Dividends, with an average annualized yield of 1.4% for stocks in the S&P 500 recently, will make a more important contribution to total returns.

Peak uncertainty

Whatever their political persuasion, investors re-learned the lesson this year that markets hate uncertainty.

President Trump’s first 100 days in office, which ended on April 30, delivered that in spades, leading to the second-worst performance for a presidential debut since 1945, behind only Richard Nixon’s second term. Amid a barrage of executive orders and federal workforce firings, on-again, off-again tariffs most roiled financial markets. Is the worst over? Many on Wall Street think so.

“There’s a chance that peak-level uncertainty occurred on April 2,” when reciprocal tariffs were first rolled out, says Chris Fasciano, chief market strategist at Commonwealth Financial Network.

The ferocity of the downturn that followed, extreme bearish sentiment among investors and swift downward revisions of corporate earnings estimates can all be contrarian indicators that signal a market trough.

“People are excessively negative,” says Brian Belski, chief investment strategist at BMO Capital Markets. “They’re acting like it’s the end of the world.”

Belski, who recently lowered his year-end S&P 500 price target from 6700 to a still healthy 6100, calls himself “bullish but with a dose of reality.”

Indeed, by the end of April, a relief rally had pushed stocks up 12% from their low earlier in the volatile month, and in the first days of May, the longest daily winning streak in more than 20 years put the S&P 500 back above pre-tariff levels.

Still, many on Wall Street warn that we could see months of a range-bound market ahead, in which the S&P 500 retests its lows and, unless there’s a catalyst like a solid trade deal with China, struggles to break through to new highs.

“When you look at drawdowns of 15% or more, you don’t necessarily see the kind of V-shaped recovery that we saw in 2020,” says George Smith, portfolio strategist at LPL Financial. “More often than not, markets bumble around in a bottoming process for a few months, depending on whether there’s a recession that materializes.”

That argues for being patient about picking your opportunities. “We’re in the wait-and-see camp,” says Smith. Says Darrell Cronk, president of Wells Fargo Investment Institute: “We would be careful here chasing too hard on equities, as you will likely get a better opportunity in the coming weeks.”

Doug Ramsey, chief investment officer of money management firm Leuthold Group, is one of Wall Street’s stalwart bears.

“I still wouldn’t rule out a decline of 35% from peak to trough on the S&P 500,” he says. That would take the benchmark down to roughly the 4000 level. “It sounds like a lot,” Ramsey concedes.

His dour views stem from a dim outlook for the economy. But he also thinks that given how overvalued the stock market was at the start of the correction, it did not decline enough to make valuations compelling enough for a durable rally.

The S&P 500, trading at more than 22 times estimated earnings at its peak, fell to about 19 times earnings at its low. “Modern-era lows have been in the 14 to 15 times range,” Ramsey notes.

By the end of April, the benchmark was back to trading at 20 times earnings.

Eyes on the economy

So-called “soft” data on investor sentiment and consumer confidence has been plunging for months — which matters, because consumer spending accounts for roughly two-thirds of the U.S. economy.

The Conference Board reported that consumer confidence fell for the fifth straight month in April. The expectations component of the survey, based on consumers’ short-term outlook for income, business and labor market conditions, dropped to its lowest level since October 2011 and has fallen well below the threshold that usually signals a recession is ahead.

The decline in confidence was broad-based among all age groups, most income groups and all political affiliations, the Conference Board said.

There has been little “hard” data so far, in terms of reports on economic activity, to justify — or belie — consumers’ pessimism.

News that gross domestic product contracted in the first quarter was unsettling, although not as bad as it appeared at first, after economists dug into the details on consumer and business spending. (Two successive quarters of contraction is the traditional indicator of a recession.)

“We expect GDP growth to slow sharply this year as higher tariffs and a spike in policy uncertainty weigh on disposable income, consumer spending and business investment, and see a 45% probability of entering a recession over the next 12 months,” wrote Goldman Sachs economists in a recent note to clients.

An April jobs report, however, showed a still-resilient labor market, with the number of jobs added above expectations, albeit below the prior month’s levels, and unemployment steady at 4.2%.

“It seems that businesses are mostly staying the course for now in the face of considerable tariff uncertainty,” says Jason Pride, chief of investment strategy and research at Glenmede, a money management firm.

But economists at BofA Securities warn that immigration restrictions are likely to weigh on payrolls in the coming months, especially in sectors such as leisure and hospitality, education and health, and construction.

Tariffs should begin to weigh on the trade, transportation and warehousing sectors. Kiplinger expects an unemployment rate of 4.5% by year-end.

A consensus of economists surveyed in April by Blue Chip Economic Indicators estimates a 63% probability of stagflation-like conditions emerging in the economy over the next 12 months — a scenario in which economic growth stagnates amid rising inflation.

The economists on average expect U.S. GDP growth of 1.4% for 2025, down from their estimate of 2.0% in March, and down from a growth rate of 2.8% in 2024. They see inflation, as measured by the consumer price index, averaging 3.3% in 2025, up from 2.9% in 2024.

The path ahead will require finesse on the part of the Federal Reserve, as the central bank fights inflation with higher rates but slower economic growth with lower ones.

“The Fed is trying to gauge in real time whether the ‘stag’ or the ‘flation’ is the bigger risk to the outlook,” says Glenmede’s Pride.

Traders were recently betting on three quarter-point rate cuts this year, starting at the Fed’s July meeting, according to the tracker CME FedWatch. That would bring the Fed’s benchmark rate to a range of 3.50% to 3.75% at year-end. Kiplinger expects that yields on 10-year Treasury notes, which spiked to nearly 5% in mid April during their own tariff tantrum, could slip to 4% as the economy slows.

We should note here that the stock market anticipates the economy rather than reacts to it. In other words, by the time we know we’re in a recession, stocks have typically turned the corner already and are off to the races.

The lesson: Stick to your investment plan and avoid trying to time the market.

A check-engine light

Corporate earnings growth is the stock market’s engine. Is it sputtering? The earnings picture is among the cloudiest for the second half of 2025.

As first-quarter earnings season got under way, executives at S&P 500 companies brought up the word tariffs in 93% of calls with analysts and investors through late April, according to Morgan Stanley research, up from 53% in the fourth quarter of 2024; uncertainty was discussed in 89% of calls, compared with 38% for the fourth quarter.

Some companies have declined to give the usual guidance about future results or have taken the unusual step of outlining potential outcomes under different scenarios.

For example, Skechers, the footwear company, said it was rescinding prior guidance and not providing an update “due to macroeconomic uncertainty stemming from global trade policies.”

United Airlines said its outlook “is dependent on the macro environment, which the company believes is impossible to predict this year with any degree of confidence.” United estimated 2025 earnings under a “stable environment” at $11.50 to $13.50 a share; under a “recessionary environment” at $9.00 to $11.00 a share.

According to FactSet Research Systems, 58% of companies reporting so far have given negative guidance for the current fiscal year.

Closely watched reports from investors’ favorite tech stocks helped buoy the market’s late-April rally, but there were still a few red flags: Apple, for one, indicated that the tariff situation, if it remains unchanged, could add $900 million to costs in the quarter that ends in June.

Overall, analysts are estimating annual earnings growth of nearly 9% for S&P 500 companies in 2025, according to earnings tracker LSEG I/B/E/S. In January, analysts had estimated earnings growth of 14%. Even so, the current consensus is still too bullish, according to a number of strategists.

Goldman Sachs analysts are forecasting 3% earnings growth this year; UBS Global Wealth Management strategists are looking for profits to be flat.

Where to invest

If they haven’t already, says Capital Group equity investment director David Polak, the first thing investors should do is “make sure they have a steady ship; identify where they might have risk. If you have companies exposed to tariff outcomes, you might want to do something about that. Once you steady the ship, then look at companies that are presenting an opportunity.”

No stock is tariff-proof, because the impact of tariffs is economy-wide, says Polak. But the degree of sensitivity matters, and service providers, including insurance companies, should fare better than manufacturers.

A favorite of Capital Group’s Jonsson is Chubb (CB, $286). “It’s diversified globally, trades at a low price-earnings multiple and goes up when markets go up, but does better in down periods,” she says.

While uncertainty persists, it makes sense to tilt toward defensive stocks in your portfolio, especially if capital preservation is your main goal.

That includes sectors such as consumer staples and utilities, which outperformed the S&P 500 by about 11 percentage points in the correction and are still ahead of the market for the year to date. Add a dividend cushion with Schwab U.S. Dividend Equity (SCHD, $26), a member of the Kiplinger ETF 20, the list of our favorite exchange-traded funds.

Quality is also key. Shunned by investors for a decade, firms whose stocks trade at bargain prices relative to earnings and other metrics have spent the time repairing their balance sheets and now account for a high proportion of quality names, according to analysts at BofA Securities. Value stalwart Dodge & Cox Stock (DODGX) is one of the Kiplinger 25, the list of our favorite actively managed no-load funds. Or look at ETF 20 pick JPMorgan U.S. Quality Factor (JQUA, $56).

If you’ve got no stomach for market gyrations, focus on low-volatility stocks with an ETF such as iShares MSCI USA Minimum Volatility (USMV, $93).

From the start of the year through April 30, the fund is up 4.5%, including dividends — almost the mirror image of the S&P 500’s negative 4.9% return. Conversely, you could make a virtue of market volatility with CME Group (CME, $277), which operates markets for futures and options trading. “Whether markets are going up or down, they’ve got a contract on everything that trades,” says Jonsson. The stock yields a generous 3.9%.

Just don’t go overboard on defense. The best portfolio to ride out 2025 is one that balances safety with growth. The snap-back rally in April shows that “growthier,” tech-oriented and economy-sensitive U.S. names are worth consideration.

“The artificial intelligence and productivity growth story is still here,” says LPL’s Smith, who says he remains positive on U.S. large-company growth stocks. CFRA strategists also recommend tilting toward stocks in the technology and communications-services sectors. Stocks they rate “buy” include cybersecurity firm CrowdStrike (CRWD, $429) and T-Mobile US (TMUS, $247).

Several strategists are bullish on financials. “They’re amazing,” says BMO’s Belski, who sees a cash-rich sector with attractive dividends that could benefit from potential banking deregulation. Find a wide array of insurers, banks and payment processors in an ETF like Financial Select Sector SPDR (XLF, $49).

International stock markets have languished for years relative to the U.S., despite cheaper valuations. But they are having a moment in 2025. The MSCI EAFE index is up nearly 12% so far this year; the MSCI Europe index has soared more than 15%.

“We’ve been Team USA for the past several years — Captain America with a capital C and a capital A,” says Truist’s Lerner.

He still favors U.S. stocks, but over the past six months he has boosted international exposure. A weaker dollar benefits U.S. investors who invest overseas, as foreign gains translate into more greenbacks back home.

And Commonwealth’s Fasciano says increased spending — in Europe on infrastructure and defense and in China on stimulating consumer demand — could be the catalyst that international markets have been lacking.

Small- and mid-cap stocks should be on your radar. Although small-company stocks, especially, have been among the worst performers so far this year, that may change if in fact we do get a recession.

Those stocks, particularly sensitive to economic swings and interest rates, will be first out of the gate in the recovery. DF Dent Midcap Growth (DFDMX) and T. Rowe Price Small-Cap Value (PRSVX) are Kip 25 funds.

Fixed-income investors should not be spooked by volatility in the bond market in April, when long-term bond yields spiked as some investors worried that the safe-haven status of U.S. Treasuries was jeopardized.

“We’re trying to separate the signal from the noise” says Chitrang Purani, a fixed-income portfolio manager for Capital Group.

Although volatility could persist, Purani believes bonds will fulfill their role as portfolio ballast over the medium and long term.

For now, Purani recommends that investors look for high-quality yields with resilience in the event of market declines, including short- and intermediate-term Treasuries.

“Focus on that part of the curve — it should benefit if economic growth slows down. And if it doesn’t, there are still attractive yields to be harvested,” he says.

Purani also likes higher-quality corporate bonds, securitized credit (bonds backed by pools of IOUs) and Treasury inflation-protected securities.

Funds we like include Kip ETF 20 member iShares Short Duration Bond Active (NEAR, $51), yielding 4.5% and holding a mix of government, corporate and securitized debt, and Baird Aggregate Bond (BAGSX), a Kip 25 fund with a 4% yield and a 3% year-to-date return.

This is a good time to explore some outside-the-box diversifiers for small slivers of your portfolio.

Gold, trading at roughly $3,300 per ounce recently, is just about the best-performing asset for the year to date, as investors tend to flock to the yellow metal in times of geopolitical and economic uncertainty. Given its parabolic rise, wait for gold to digest recent gains, or for a pullback closer to $3,000 an ounce, advises Truist’s Lerner. iShares Gold Trust (IAU, $62) is an easy way to buy. Or consider miners such as Newmont (NEM, $53), rated “buy” by analysts at Argus Research, who just raised their 12-month price target for the stock to $63 a share.

A final thought as we head into the rest of 2025. Aside from its gut-wrenching volatility, the year may well be remembered as the time when a diversified portfolio took on a market dominated by the Magnificent Seven — and won.

“After being out of favor for several years, diversification is back in vogue,” says Fasciano. “It’s the best way to navigate uncertainty, and the opportunities are broader than they have been.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Hence my segue into an assessment of the various sectors heading into summer. Despite lagging performance in early 2025, municipal bonds offer clear and present value, with yields as a percentage of Treasury rates that are extremely high.

While a 10-year T-bond yields 4.2%, for example, you can find AA-rated and AAA-rated tax-free issues galore priced to yield as much or more to maturity, for a taxable-equivalent yield in the range of 6% to 7%. This is due to what U.S. Bank bond honcho Bill Merz calls "an incremental blend of a variety of things," including a burst of new muni supply in 2025 that was just in time for mass selling of illiquid municipal exchange-traded funds that cheapened the entire sector.

But now yields are high enough to bring insurance companies back alongside individuals. And if you reckon the world is quasi-boycotting Treasury debt and other U.S. assets, foreigners are not much of a factor in municipals.

Next — and this sounds counterintuitive — I would not avoid high-yield corporate bonds. Yes, this group is more closely correlated to stocks than munis and Treasuries. And yes, in April some of my favorite high-yield funds, such as Fidelity Capital & Income and Hotchkis & Wiley High Yield, got body-slammed while stocks crashed. But unless you think the economy is failing — the first-quarter decline in economic growth is misleadingly negative — the extra yield will still pay for itself.

"Fifty percent of high yield is double-B, while it used to be only one-third," says American Century's corporate bond chief Jason Greenblath. While bank-loan defaults may be creeping higher and CCC-rated bonds are dicey, BB bond credit problems are not.

Most high-yield funds lean toward the stronger layers of the sector. And after the struggles in April, the spread between BB bonds and Treasury yields has narrowed again after spiking to more than 3 percentage points in the April trading panic. But at around 2 to 2.5 percentage points, the extra income is still greater than at the start of the year.

Nice yields, minimal risk

I also see fresh opportunities in preferred stocks, either via funds or in the individual issues of banks, utilities and insurance companies.

The rule is that any $25-par-value investment-grade preferred priced at around $23 is safe to buy and becomes an instant source of extra yield. Various Allstate, Bank of America, JPMorgan, Truist and electric-company preferred shares occupy this zone, for current yields between 6% and 7% and minimal risk.

If you go down in quality to BB, you can find more than 7%. Banks and insurers are in better condition than in 2008, so if the entire economy really does falter, they will not fail or get downgraded to where the value of these obligations takes another whacking.

I’ll note that the stocks and stock funds that did the best during the worst of the unpleasantness are the most bondlike: AT&T, Realty Income, Franklin Low Volatility High Dividend ETF — or pretty much any fund with "dividend" in its name. Nothing is immune from renewed pressure if the political situation, the economic situation or both descend into another, more intractable crisis.

The chance of stagflation and that sell-America theme rule out long-term Treasury bonds unless you can hold to maturity. But the domestically focused high-income standbys that have been dear to my heart for decades are likely to survive.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Indeed, President Trump has named Treasury Secretary Scott Bessent, once a candidate himself, to lead the search for a new Fed chair.

In early August, Trump got his first chance during his second administration to re-shape the central bank when Fed Governor Adriana Kugler announced her resignation.

The White House moved quickly to name Stephen Miran to succeed Kugler on the Fed board. Miran, the chair of the White House Council of Economic Advisers, is now a favorite to succeed Powell as Fed chair.

As the president said during a July 24 visit to Fed headquarters, "I just want to see one thing happen, very simple: interest rates come down." The central bank has held rates steady since last September to evaluate incoming economic data for signs of inflation.

As recently as June 25, Trump said he knew "within three or four people who all I'm going to pick." The list has evolved since then and now no longer includes Bessent. It has expanded to 13 names, with Miran's at the top.

One way or another, Jerome Powell is leaving the Federal Reserve, and relatively soon. Indeed, his term is up in May of next year.

Questions about whether Trump has the power to fire Powell are less relevant now than who will be the next Fed chair.

But longer-term issues such as the extent to which the executive can and should exercise authority over the central bank and monetary policy will linger.

Federal Reserve math

To begin with, the Federal Reserve is not a single bank, nor is it led by just one person.

Rather, the Federal Reserve Act of 1913, which established the Fed as the U.S. central banking system, created 12 regional reserve banks and a Board of Governors of the Federal Reserve System that consists of seven individuals.

This board is nominated by the president and confirmed by the Senate. One of these board members is then nominated for the chair position and the Senate votes on that appointment, too.

That may sound like semantics, but the process shows it's not quite as simple as President Trump replacing one person with another. At least, not according to legal precedent and the Federal Reserve Act.

Interestingly, Powell was appointed to lead the Fed by Donald Trump in 2018. He was then confirmed by the Senate overwhelmingly, by a vote of 84-13.

His first four-year term in the role expired, but he was again confirmed in 2022 for another four-year stint by an 80-19 vote.

That puts Powell's current term as chair at expiration in May 2026 – although his broader appointment to the Fed's board technically won't expire until January 2028, regardless of chairmanship status.

A timeline for Trump to announce Powell's replacement is firming, and it appears, as The Wall Street Journal reported in June, it could happen by September or October.

Who could replace Powell as Fed chair?

One way or another, either because of his 2026 term expiration or a potential firing, Powell's days as Fed chair are numbered.

Here are a few potential replacements who have been mentioned recently:

And here are the most prominent names in the mix to be the next Fed chair:

Stephen Miran, White House Council of Economic Advisers chair

On August X, President Trump nominated Stephen Miran to take Adriana Kugler's place as one of seven members of the Fed's Board of Governors.

Miran was confirmed by the Senate in March to chair the Council of Economic Advisers, an executive agency under the direct authority of the president.

Before joining the second Trump administration, Miran was a senior strategist at Hudson Bay Capital Management and a senior fellow at the Manhattan Institute for Policy Research.

During the first Trump administration, he served as a senior for economic policy at the Treasury Department, providing assistance with fiscal support during the pandemic recession including the Paycheck Protection Program and other support programs.

"There just still continues to be no evidence whatsoever of any tariff-induced inflation," Miran said during an August 12 appearance on CNBC. "Lots of folks who were expecting ... doom and gloom, it just hasn’t panned out, and it continues to not pan out for them."

Miran earned a Ph.D. in economics from Harvard University and a B.A. from Boston University, where he studied economics, philosophy, and mathematics.

Kevin Hassett, White House National Economic Council director

Kevin Hassett has the one-two punch of conservative political credentials and academic pedigree.

Hassett worked at the American Enterprise Institute, a conservative think tank, and advised other leading Republicans such as John McCain, George W. Bush and Mitt Romney.

Most importantly, he also served as chairman of the Council of Economic Advisers in the first Trump administration and returned to the White House to serve as its current director of its National Economic Council.

There's one caveat, though: Hassett argued in his 2021 book that previous efforts to fire Powell during Trump's first term would have harmed the Fed's reputation as an objective institution.

More recently, he has tried to walk back from those remarks, but if Trump does jump the gun before Powell's term expires next May, that could make any Senate confirmation hearings of Hassett interesting to watch.

Kevin Warsh, former Federal Reserve Governor

Kevin Warsh served as former Fed Chair Ben Bernanke's right-hand man during the 2008 financial crisis. That gives him tremendous street cred on Wall Street, and would help provide stability if markets get rocky due to Trump's very public pressures on the central bank.

But what really has Warsh on the short list is his great relationship with President Trump, who had reportedly considered the economist for the position of Treasury secretary before nominating Scott Bessent.

Though a "hawk" that generally favors higher interest rates rather than the risk of inflation, his record as an ally of the Trump administration is critical and raises his chances of rejoining the Fed and taking its reins as chair.

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As expected, the Federal Open Market Committee (FOMC) did not cut interest rates this time around, but the central bank's Summary of Economic Projections (SEP), or "dot plot," shows the central bank expects two quarter-point percentage cuts to the federal funds rate by year's end.

Wall Street also looked to Federal Reserve Chief Jerome Powell's press conference to see how President Donald Trump's tariff policies could impact the central bank's decisions moving forward, though the chair maintained his data-dependent mantra.

The Kiplinger team reported live on the June Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy. Join us again in July for the next Fed meeting.

What Is the Federal Funds Rate? | Master the Fed Funds Rate, Help Clients Master Retirement | Why Does the Fed Prefer PCE Over CPI?

President Trump's tariff policies have yet to impact inflation

Inflation eased more than expected in May, according to the Bureau of Labor Statistics.

Headline CPI was up 0.1% month over month in May, slower than April's 0.2% rise and the 0.2% increase economists expected.

The CPI was 2.4% higher year over year, slightly higher than the 2.3% increase seen the month prior and in line with economists' projections.

Shelter was the "primary factor" for the increase in headline CPI, according to BLS, up 0.3% on the month. Energy costs, meanwhile, were down 1% in May as gas prices declined.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.1% from April to May and 2.8% year over year. Economists expected 0.3% and 2.9% increases, respectively.

The May CPI report, alongside news that the U.S. and China have reached a trade deal, is doing little to move the needle on rate-cut expectations.

According to CME FedWatch, futures traders are pricing in a 99.9% chance the central bank will hold rates steady, with the first quarter-point rate cut not expected until September.

- Karee Venema

The labor market remains resilient

The Federal Reserve has a dual mandate of price stability and maximum employment – and both sides appear to be on solid footing at the moment.

Indeed, while the May Consumer Price Index signaled progress on the inflation front, the most recent jobs report showed a resilient labor market.

According to the Labor Department, the U.S. added 139,000 new jobs last month, more than economists expected. And while figures for March and April were revised down, the unemployment rate remained at a historically low 4.2%.

"It's clear that the economy remains resilient, with the job market holding up well," said Chris Zaccarelli, chief investment officer at Northlight Asset Management.

The CIO added that the Fed "should be reluctant to cut rates because the full effects of tariffs haven't impacted inflation numbers yet and the job market isn't deteriorating enough to force their hand."

- Karee Venema

When is Jerome Powell's term as Fed chair up?

Despite President Trump's innuendos that he would like to fire Fed Chair Jerome Powell, the Supreme Court has suggested that it would oppose such an action.

Indeed, Trump in April used his Truth Social platform to call for Powell's termination, while an April 17 report in The Wall Street Journal discussed private meetings where the president expressed his desire to remove the Fed chair from his post.

Nevertheless, the question of whether or not Trump can fire Powell is seemingly moot given that his term as Fed chair is up in less than a year from now – on May 15, 2026.

It's unlikely that those in Trump's inner circle will encourage him to disrupt the status quo – and likely send stocks and bonds tumbling – when Powell has such a small amount of time left in his term.

For what it's worth, Powell's term as a member of the Board of Governors of the Federal Reserve ends on January 31, 2028.

- Karee Venema

How long will we have to wait for a Fed rate cut?

The Federal Reserve is not going to change rates at its June 17-18 meeting next week. In fact, don't expect the central bank to make any adjustments until maybe its October meeting.

The Fed wants to know how tariffs are affecting both inflation and the economy. Until the impact is clearer, the Fed will wait.

Yes, that raises the risk that the Fed will act too late, but it may be better to wait at the crosswalk than to look the wrong way crossing the street.

- David Payne

Who gets to vote on Fed policy?

The Federal Open Market Committee (FOMC), which is the Federal Reserve's policy-setting group, has 12 members, eight permanent and four who rotate each year.

The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed.

Four regional Fed presidents are rotated in each calendar year.

The 2025 FOMC voting committee consists of:

• Fed Chair Jerome Powell
• Vice Chair Philip Jefferson
• Fed Governor Michael Barr
• Fed Governor Michelle Bowman
• Fed Governor Lisa Cook
• Fed Governor Adriana Kugler
• Fed Governor Christopher Waller
• New York Fed President John Williams
• Boston Fed President Susan Collins
• Chicago Fed President Austan Goolsbee
• St. Louis Fed President Alberto Musalem
• Kansas City Fed President Jeffrey Schmid

In 2026, the presidents from Cleveland, Philadelphia, Dallas and Minneapolis will rotate in as FOMC voting members, according to the Federal Reserve.

- Karee Venema

Wholesale prices rose less than expected in May

Wall Street continues to be met with encouraging inflation data, indicating that President Trump's aggressive tariff policies have yet to impact price growth.

Ahead of Thursday's open, data from the Bureau of Labor Statistics showed that the Producer Price Index (PPI), which measures what businesses are paying suppliers for goods, was up 0.1% month over month in May.

While this was quicker than the revised 0.2% decline seen in April, it was slower than the 0.2% rise economists expected.

Year over year, wholesale prices rose 2.6%, in line with expectations.

Core PPI, which excludes volatile food and energy costs, was up 0.1% on a monthly basis and 3.0% higher year over year.

Economists had called for core PPI to increase 0.3% and 3.1% monthly and yearly, respectively.

These soft back-to-back readings on inflation give "the Fed room to sit on their hands," says Chris Zaccarelli, chief investment officer for Northlight Asset Management.

"As long as inflation isn’t increasing – or even better, is decreasing – the Fed can be patient and wait for more information on how the new tariffs and trade negotiations are going to impact the price stability part of their dual mandate later this year," he adds.

- Karee Venema

What is the FOMC meeting schedule?

The Federal Open Market Committee meets eight times a year, or about once every six weeks. The FOMC is required to meet at least four times a year and may convene additional meetings if necessary.

The convention of meeting eight times per year dates back to the market stresses of 1981.

FOMC meetings last two days and conclude with the committee releasing its policy decision at 2 pm Eastern time. The Fed chair then holds a press conference at 2:30 pm.

Pro tip: As closely scrutinized as the FOMC statement might be, market participants are usually even more keen on what the Federal Reserve chair has to say in the press conference.

Read more: When Is the Next Fed Meeting?

Jobless claims hold steady

The Labor Department said Thursday that initial jobless claims held steady at 248,000 in the week ending June 7, higher than the 242,000 economists expected.

The four-week moving average rose by 5,000 to 240,250. "This is the highest level for this average since August 26, 2023 when it was 245,000," according to the Labor Department.

Bill Adams, chief economist at Comerica, says that while this report shows the labor market is softening, the data are not so clear-cut.

"While the Department of Labor tries to adjust the claims data for seasonal variations, that’s easier said than done," Adams notes. "Initial and continued claims are up from the spring, but both rose from spring to summer in 2023 and 2024 as well."

The difference between now and then, the economist explains, is that in 2025, folks who have lost their jobs are having a harder time finding a new one.

- Karee Venema

A "shadow" Fed chair?

Bloomberg reports President Donald Trump is considering Treasury Secretary Scott Bessent – amid his tariffs-and-trade war star ascension – to be the next Federal Reserve chair.

Jerome Powell, the current Fed chair, presumably will be in charge of things at 20th Street and Constitution Avenue in Washington, D.C., through May 15, 2026.

And yet the primary occupant at 1600 Pennsylvania Avenue continues to do his very best to get Powell to cut interest rates.

Markets have been wary of President Trump's attempts to compromise the independence of the central bank for evermore.

And Bessent, before he was even a nominee for a cabinet position, detailed for Barron's a plan to work around Powell.

"You could do the earliest Fed nomination and create a shadow Fed chair," Bessent said in an interview published October 9. "And based on the concept of forward guidance, no one is really going to care what Jerome Powell has to say anymore."

Perhaps Bessent is the change Trump has been waiting for…

- David Dittman

Trump, Vance pile up on Powell

President Trump turned his ire toward Jerome Powell again on Thursday, calling the Fed chair a "numbskull" for not cutting interest rates.

The president said the U.S. could save $600 billion a year if the FOMC lowered the federal funds rate by 2 percentage points, but they "can't get this guy to do it."

Trump added that he "may have to force something" if inflation keeps falling and the Fed remains on the sidelines.

This follows Wednesday's comments from Vice President J.D. Vance, who wrote in a post on X that "the refusal by the Fed to cut rates is monetary malpractice."

Throughout his tenure, Powell has been adamant about the Fed's independence and told President Trump when they met in May that the central bank would make monetary policy decisions "based solely on careful, objective and non-political analysis."

- Karee Venema

S&P 500 nears record high ahead of the Fed meeting

Stocks closed higher Thursday, bringing the S&P 500 closer to record-high territory. The broad-market index settled at 6,045.26 on June 12, putting it less than 2 percentage points away from surpassing its all-time closing high of 6,144.15 from February 19.

The fact that we're even talking about record highs for the stock market is fairly remarkable considering stocks were flirting with a new bear market back in April after President Trump's aggressive retaliatory tariffs sparked a major sell-off.

Since April 8, the S&P 500 is up more than 21% and is now nearly 3% higher for the year to date.

"The return of cyclical leadership and broad participation since the April 8 low provides additional technical evidence of a sustainable recovery," says Adam Turnquist, chief technical strategist for LPL Financial.

Turnquist says "bullish but not overbought momentum, relatively light investor positioning, and sanguine but not stretched investor sentiment" suggests that this rally has legs.

- Karee Venema

Stock futures drop after Israel attacks Iran

Global equity markets are falling Friday after Israel launched airstrikes on Iran overnight, killing the head of the Islamic Revolutionary Guard Corps and hitting several nuclear facilities.

The strikes will continue "for as many days as it takes," said Israeli Prime Minister Benjamin Netanyahu, in order to "roll back [Iran's] uranium threat."

President Trump warned that these additional strikes "could be more brutal," and encouraged Iran to make a deal with Israel "before there is nothing left."

But Ayatollah Ali Khamenei, Iran's supreme leader, said that Israel "should anticipate a harsh punishment."

At last check, futures on the Dow, S&P 500 and Nasdaq were all down roughly 1%. Oil futures, meanwhile, were 8% higher at last check to trade near their highest level since early 2025.

While Israel's attack on Iran is unlikely to alter the Fed's decision next week, the central bank will certainly be watching the jump in oil prices and its impact on inflation.

- Karee Venema

Tariffs could lift inflation to 3%, Yellen says

Former Treasury Secretary Janet Yellen talked tariffs in an appearance on CNBC's "Money Movers."

Yellen, who preceded Jerome Powell as Fed chair, said that she expects the annual inflation rate to be "at least 3%" at the end of this year, "because of the tariffs."

For reference, the annual inflation rate for 2024, as measured by the Consumer Price Index, was 2.9%.

She also said the "most recent and optimistic outlook" that she's seen suggested the average household will incur a $1,000 hit to income as a direct result of tariffs, as well as their broader impact.

However, Yellen acknowledged that "there remains a huge degree of uncertainty" around the Trump administration's trade policies, which, she said, will keep Powell & Co. "firmly in latency territory."

- Karee Venema

Let's talk about the Fed and sentiment surveys

The Fed will certainly take notice of the surge in consumer sentiment reflected in preliminary University of Michigan survey data for June. Improvement at the headline level for the first time in six months is good news.

Details are good too.

"All five index components rose," writes survey director Joanne Hsu, "with a particularly steep increase for short and long-run expected business conditions, consistent with a perceived easing of pressures from tariffs."

Meanwhile, Hsu continues, "Consumers appear to have settled somewhat from the shock of the extremely high tariffs announced in April and the policy volatility seen in the weeks that followed."

Indeed, one-year-ahead inflation expectations plunged from 6.6% to 5.1%, and the five-year figure ticked down from 4.2% to 4.1%, both readings the lowest in three months.

OK, here's the thing… The Fed already had a read on improved sentiment – including all-important inflation expectations – based on a dataset it probably favors.

The Michigan survey is robust and trustworthy, no question. However, the New York Fed Survey of Consumer Expectations includes design features that set its data apart on a head-to-head basis.

The New York Fed simply asks more people more specific inflation-related questions, and it asks basically the same group of people questions designed to reflect current conditions over the course of 12 months.

Both surveys use "rotating" panels. But Michigan polls a new set of respondents every month, which its designers say smooths potential biases and captures a broader range of opinion.

The NY Fed tracks a fixed group of respondents over the course of a year, with a consistent fraction of respondents entering and exiting the panel each month.

So monetary policymakers are able to track changes over time at a more granular level.

Michigan is useful. We also cross-check that kind of soft data with actual behavior in the form of hard retail sales data, for example, for a broader look at consumer health.

The New York Fed, by comparison, is a harder form of soft data, specifically with regard to inflation expectations.

- David Dittman

Retail sales arrive ahead of the Fed meeting

Retail sales are one of the more noteworthy events on next week's economic calendar. The data gives a key look at inflation and consumers' ability and willingness to spend money.

In April, retail sales rose a stronger-than-expected 0.1%, while March's increase was upwardly revised to 1.7%.

"The lack of a pullback in April sales indicates that consumers are still buying heavily in anticipation of price increases driven by new tariffs later," writes David Payne, staff economist at The Kiplinger Letter, in Kiplinger's retail outlook.

For May, BofA Securities economists Aditya Bhave and Shruti Mishra expect retail sales growth to be flat month to month as positive seasonal factors will offset weak spending on home improvement, groceries, gas and furniture.

Retail sales will be released on Tuesday, June 17, at 8:30 am Eastern Standard Time.

- Karee Venema

What will the dot plot reveal?

It's all but certain that the Fed will keep interest rates unchanged this time around, but there is still plenty that could move markets.

Indeed, this meeting will include the release of the central bank's Summary of Economic Projections (SEP), or "dot plot," which summarizes what each member expects monetary policy to be going forward.

In March, the Fed's dot plot indicated expectations that the federal funds rate would be lowered to 3.9% by the end of 2025, suggesting just two quarter-point rate cuts by year's end.

The March SEP also implied expectations for slower growth, higher unemployment and a slight increase in inflation.

A team of Deutsche Bank economists led by Matthew Luzzetti expects the dot plot will show expectations for just one rate cut this year and for a downgrade to GDP growth for 2025 (to 1.3% from 1.7%).

They believe the unemployment rate projection will remain unchanged at 4.4%, while the year-end inflation forecast, which "will be the most difficult to assess given the uncertainties around tariffs," will rise to 3.0% from 2.8%.

- Karee Venema

Why it's a safe bet that Powell will wear a purple tie on Wednesday

While the odds of a June rate cut are low, the odds are high that Federal Reserve Chair Jerome Powell will wear a purple tie during Wednesday's press conference.

That's because Powell always wears a purple tie. And there's a reason for it.

During an early April Q&A session with journalists at the Society for Advancing Business Editing and Writing (SABEW) conference, Powell was asked about the significance of his purple ties.

"At the beginning, the only significance was that I like purple ties," Powell replied. At his next press conference, he said he went to reach for a red or blue tie and thought, "Maybe not … so I wind up wearing purple."

He said now it's become "a thing," and it supports the fact that the Fed "is strictly non-political" and "bipartisan," and purple is a good color for that.

"Plus, I like purple ties," Powell concluded.

- Karee Venema

What time will the Fed statement be released?

The Federal Open Market Committee will release its updated policy statement at 2 pm Eastern Standard Time on Wednesday, June 18.

"Uncertainty about the economic outlook has increased further," the FOMC noted in its May policy statement, adding that the committee "is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen."

This time around, Deutsche Bank economists expect some minor adjustments to the statement, including the removal of a reference to net exports weighing on first-quarter gross domestic product, which caused a contraction in U.S. economic activity.

The economists note that most data points released since Q1 GDP point to solid economic activity and labor market conditions.

- Karee Venema

Stocks eye a higher open to start Fed week

Futures on the major U.S. stock indexes are pointed higher Monday morning as investors shrug off escalating tensions between Israel and Iran.

At last check, futures on the blue chip Dow were up 0.6%, while the broader S&P 500 was 0.7% higher and the tech-heavy Nasdaq had gained 0.8%.

Elsewhere, crude oil looks set to give back some of last week's big gains, with the front-month contract trading down 2%, while gold futures are off 0.6%.

- Karee Venema

What are Fed officials saying about rate cuts?

Federal Reserve officials have had plenty to say about interest rates since the policymakers last met in May – with many repeating Fed Chair Powell's "wait-and-see" mantra.

"Since the FOMC's May meeting, several FOMC participants reiterated that the Committee is well positioned to wait for greater clarity before considering any adjustments to the stance of monetary policy," Goldman Sachs explains.

Goldman Sachs adds that members continue "to suggest that the bar for cutting is currently high" amid elevated uncertainty and sticky inflation.

Indeed, in prepared remarks for a June 5 appearance at a banking policy event, Kansas City Fed President Jeffrey Schmid said, "While theory might suggest that monetary policy should look through a one-time increase in prices, I would be uncomfortable staking the Fed's reputation and credibility on theory."

Schmid went on to say that although long-term inflation expectations remain anchored, "this is not a signal that we should let our guard down."

Meanwhile, at a June 5 event at the Economic Club of New York, Fed Governor Adriana Kugler noted that monetary policy, which she views as "modestly restrictive," is "currently appropriate to achieve and sustain 2 percent inflation over the longer term."

Kugler adds that she supports maintaining interest rates at current levels "if upside risks to inflation remain."

- Karee Venema

Does the Fed respond to oil price shocks?

As of Monday afternoon, CME Group's FedWatch is pricing a 99.9% probability the Federal Reserve holds the target range for the federal funds rate at 4.25% to 4.50%.

The probability the Fed holds again in July has ticked up to 85.5% from 76.9% on Friday. Traders have pared bets on a September cut, too.

So the market is "pricing out" interest-rate cuts despite the outbreak of hostilities between Israel and Iran.

It's unlikely the Fed would intervene preemptively to mitigate the potential impact of a regional war on financial markets.

The variable to watch when it comes to the central bank and the Middle East is crude oil.

There's a paper on the very topic – Does the Fed Respond to Oil Price Shocks? – and the answer is, in short, "not exactly."

In their October 2009 paper, Lutz Kilian and Logan Lewis of the University of Michigan "show that there is no evidence of systematic monetary policy responses to oil price shocks after 1987."

An escalation of hostilities that constrains supply over a meaningful time frame and causes a sustained price spike could spark inflation. So the Fed would likely hold off on trimming the target range for the federal funds rate.

That's what fed funds futures traders are factoring right now.

- David Dittman

Fed Week is a short one for investors

Market participants will have one fewer day to react to the Federal Reserve's latest policy statement and Fed Chair Powell's press conference than usual.

That's because the stock and bond markets will be closed this Thursday, June 19, in observance of the Juneteenth holiday.

In 2021, Juneteenth, which commemorates the end of slavery, became the 11th federal holiday and the first new federal holiday since Martin Luther King, Jr. Day was signed into law in 1983.

You can see the full list of stock and bond holidays in 2025 here.

More on what Fed officials are saying

Public appearances by voting members of the FOMC in recent weeks have "been informative" ahead of Wednesday's policy decision, says Brian Mulberry, client portfolio manager at Zacks Investment Management.

While most of the commentary has aligned with the central bank "taking a slow and measured approach" to policy changes, there's some divergence on how central bankers are "weighing each side of the [Fed's] dual mandate," Mulberry notes.

The portfolio manager explains that some members are "concerned about rising price pressures from tariffs," while others are worried that slowing growth will cause unemployment to rise.

The problem for both sides, he believes, "is that the current data do not support the theory that prices are rising or that the labor market is weakening quickly."

This strengthens the case for a Fed pause this week, Mulberry says, and "makes any comments or statements from the FOMC or Powell in his Q&A more impactful for markets."

Mulberry adds that he'll be looking for any potential dissent among FOMC voting members, as well as commentary on how Fed officials view the strength of the economy and its ability to withstand restrictive policy levels.

"Given the 'wait and see' majority mentality, it is hard to expect more than one or two rate cuts in 2025, and it is most likely to be in the September and December meetings," he says.

- Karee Venema

Powell replacement chatter picks up

Jerome Powell's term as Fed chief will end in May of next year, but with President Donald Trump vocally expressing his frustration with the chair, many folks are speculating that it could end sooner.

As such, there's been plenty of chatter building as to who will replace Powell as head of the Federal Reserve.

As we previously mentioned, current Treasury Secretary Scott Bessent's name has recently been thrown around due in part to his prior comments about a "shadow Fed chair."

Other names in the running include Fed Governor Christopher Waller and former Fed Governor Kevin Warsh.

Read more: Who Will Replace Jerome Powell as Fed Chair?

Retail sales fall more than expected in May

Retail sales fell 0.9% from April to May, steeper than the 0.6% drop economists expected. A scaling back of car sales weighed on the data. Excluding motor vehicles, retail sales were down 0.3%. Year over year, retail sales were up 3.3%.

According to the Census Bureau, April retail sales were downwardly revised from a 0.1% gain to a 0.1% decline.

"Like the economy as a whole, consumer spending has been resilient in the face of tariff uncertainty," says Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. "Today's data suggests consumers are downshifting, but they haven't yet slammed the brakes."

- Karee Venema

When will Fed Chair Powell speak?

Federal Reserve Chair Jerome Powell's press conference is scheduled to begin at 2:30 pm Eastern Standard on Wednesday, June 18.

"Chair Powell seems likely to highlight the uncertainty, and lean on that when asked tough questions," says UBS Global Research economist Jonathan Pingle. "He did a lot of that in the May press conference too."

Pingle adds that Powell may caution that the June dot plot could be stale in just a few weeks' time, given that "conditions and assumptions for the projections could change quickly and dramatically."

But the economist believes the Fed chair will note that longer-term expectations are well-anchored and he will "likely stress their importance, plus the reliance of broader economic health on price stability."

- Karee Venema

Bank of Japan's bond purchase plan; Bank of England meets Thursday

This week is a busy one for global central banks. On Tuesday, the Bank of Japan concluded its policy meeting, keeping its key interest rate at 0.5%.

The BoJ also said it will continue to slow bond purchases by 400 billion yen each quarter through March of next year. It will then cut bond purchases to 200 billion yen per quarter from April 2026 through March 2027.

The Bank of England is also meeting this week, with the central bank set to release its latest statement on Thursday, June 19.

"We expect the Bank of England to keep rates on hold with a 7-2 vote," write BofA Securities' Global Rates & Currencies Research team.

This follows a higher-than-expected April inflation reading, which hit its highest level in 15 months. May inflation data for the U.K. will be released tomorrow, June 18.

"Guidance since the May meeting suggests the MPC is unlikely to steer out of cycle in the easing cycle and recent developments in the Middle East perhaps reinforce that position," the group adds.

However, the group anticipates rate cuts from the BoE in August, September and November.

- Karee Venema

Industrial production downshifted in May

The Federal Reserve said Tuesday that industrial production fell 0.2% in May, a notable reversal from April's 0.1% increase.

Still, manufacturing activity was up 0.1% thanks to solid demand for motor vehicles and parts.

The report also showed that capacity utilization, which measures how much of the potential output is being used, edged down to 77.4% from 77.7%.

"May’s decline in industrial production wasn’t as bad as the headline since it was mostly driven by utilities output, which is influenced more by the weather than by the business cycle," says Bill Adams, chief economist at Comerica.

He adds that the increase in manufacturing of motor vehicles and parts came after consumers rushed to buy new cars in March and April, which depleted inventories on dealer lots.

Adams doesn't expect this trend to continue, though, considering sales of new cars and light trucks fell in May.

"In short, the latest monthly economic indicators confirm that the economy operated in low gear in May," the economist says.

- Karee Venema

Who appointed Jerome Powell as Fed chair?

Jerome Powell stepped into his role as Fed chair on February 5, 2018, after being nominated by then-President Donald Trump, who was serving his first term in the White House.

Powell's initial four-year stint as head of the Federal Reserve ended in 2022, but he was reappointed for a second four-year term on May 23, 2022, after being nominated by then-President Joe Biden.

Powell initially joined the Fed's Board of Governors in 2012 after he was nominated by then-President Barack Obama.

While Powell's second term as Fed chair will expire in May 2026, he will remain on the Fed's board until January 2028.

- Karee Venema

Just like us

So I've got this weird affinity for Fed Chair Jerome Powell simply because we both went to law school but found our way, through wildly divergent paths, into finance.

We have a Juris Doctor in common, though I'm certainly no J-Powell. I do, however, appreciate his commitment to fact-gathering and recognize it as a vestige of our shared professional schooling.

At the same time, when I read Nick Timiraos this morning, I see the Fed chair confronting the same kind of uncertainty about the potential impact of tariffs that all consumers – JD or no – confront.

"Officials are worried over how tariff announcements since March could disrupt what economists refer to as 'inflation expectations'," The Wall Street Journal reporter, widely known for his contacts inside the Eccles Building, writes.

"Inflation expectations," Timiraos explains, are "what consumers and businesses think inflation will be in the future" and "can’t be seen or touched."

As we discussed in an earlier post, the University of Michigan and the New York Fed conduct surveys on consumer sentiment, including inflation expectations, as does The Conference Board. Observers also watch futures markets and traders' positions on the trajectory of inflation.

As Timiraos notes, expectations are "very tricky to measure" and at the same time "very important" to policymakers: A lot of academic study indicates expectations "play a crucial role in determining actual inflation."

That's because consumers "pull forward" purchases if they think prices will rise. Workers will ask for raises in anticipation of rising living expenses.

Producers and retailers will behave in similar ways: buying today because costs will be higher tomorrow, and raising prices too.

It's a cycle. And it seems like, even if we don't have as much insight into its dynamics as the professionals, we're all in the same drifting boat.

- David Dittman

Should you open a CD ahead of the Fed announcement?

Demand for certificates of deposit (CDs) has been on the rise in recent years, thanks to elevated interest rates, which weighed on stock market returns and had investors seeking out less-risky options.

With the Fed unlikely to start cutting interest rates until September, now could be an ideal time to lock in attractive yields on CDs.

The difference in yields on short-term and long-term CDs is minimal at the moment, so if you do decide to open a certificate of deposit, your choice between the two could rest with how long you're able to lock up your cash.

Remember that when putting your money into certificates of deposit, you're unable to access it until the CD matures. If you do withdraw funds ahead of time, you'll be charged a fee.

Read more: Should You Get a Long-Term or Short-Term CD Before the Next Fed Meeting?

Stock futures rise on Fed Day

Stock futures are pointed cautiously higher on Fed Day as investors look ahead to this afternoon's 2 pm EST policy statement and updated SEP from the FOMC. Fed Chair Powell will begin his press conference at 2:30 pm EST.

At last check, futures on the Dow were up 0.03%, while the S&P 500 was signaling a 0.7% gain and the Nasdaq was 0.2% higher.

Trump chimes on on Powell ahead of Fed announcement

Speaking to reporters outside the White House this morning, President Donald Trump issued his latest attacks on Fed Chair Powell.

"So we have a stupid person. Frankly, you probably won't cut today,” Trump told reporters, according to CNBC. "Europe had 10 cuts, and we had none. And I guess he's a political guy, I don't know. He's a political guy who's not a smart person, but he's costing the country a fortune."

For what it's worth, the European Central Bank has lowered its benchmark rate eight times in the past year. The Fed has issued three rate cuts.

- Karee Venema

Jobless claims edge lower

The Labor Department this morning said initial jobless claims fell by 5,000 in the week ending June 14, to 245,000. Economists expected unemployment claims to arrive at 246,000.

The four-week moving average of initial claims rose to 245,500, the highest level since August 2023.

"While the figures can be volatile, the trend reflects a gradually cooling labor market," says Priscilla Thiagamoorthy, senior economist at BMO Capital Markets.

- Karee Venema

Rising oil prices are not the only risk to inflation

The May Consumer Price Index (CPI) and core CPI showed that President Trump's tariff policies have yet to impact inflation, with results for both indexes coming in better than expected.

"But one swallow does not a summer make, and since then, we also had a spike in oil prices on geopolitical risk," says Naomi Fink, chief global strategist at Nikko Asset Management.

Indeed, crude oil is up more than 20% for the month to date as Israel and Iran escalate attacks against each other and these rising energy prices could stall the disinflation trend.

But Fink notes that rising oil prices are not the only risk to inflation.

"Even before the escalation of the Israel-Iran conflict, we had signals of tighter global supply chains and increasing delivery delays with the increase in uncertainty surrounding production in the presence of tariff uncertainty," she says.

Fink points to the Federal Reserve Bank of New York's Global Supply Chain Pressure Index, which is lingering near its highest level since August 2024. "These may be underlying indicators of inflationary pressures, which could keep the Fed vigilant," the strategist says.

In addition, Fink highlights a resilient labor market, "which argues against a near-term rate cut."

- Karee Venema

Where to watch Fed Chair Powell's press conference

There are plenty of ways for folks to watch Fed Chair Jerome Powell's post-meeting press conference, which begins today at 2:30 pm EST.

The Federal Reserve Board will feature a live broadcast on its website. It can also be watched on the Federal Reserve's YouTube channel.

Several media sites, including Kiplinger, will also provide direct links to live coverage of the presser.

- Karee Venema

Stocks hold gains ahead of Fed, Treasury yields slip

With roughly 30 minutes to go until the FOMC announcement, stocks are holding onto their premarket gains.

At last check, the Dow was up 0.2%, due mostly to Goldman Sachs Group's (GS) 2% gain. The S&P 500 is 0.2% higher, while the Nasdaq has added 0.3%

Oil and gas futures are also modestly higher, while yields on the 2-year Treasury and 10-year Treasury note are down about 2 basis points apiece.

- Karee Venema

The Fed decision is in

As expected, the FOMC kept the federal funds rate at its current range of 4.25% to 4.5%.

Solid economic growth does not warrant a rate cut right now

The Federal Reserve left rates unchanged at its policy meeting today, saying that economic growth was solid. This means that a rate cut doesn't appear to be needed at this time.

The Fed also released its economic projections, showing that, by a 12-to-7 majority vote, the Committee thought rates would be lower by the end of the year. About half of the Committee expects two quarter-point cuts.

It's worth noting, though, that seven committee members felt rates will be unchanged at the end of the year.

Committee members also raised their inflation projections a bit, indicating that any reduction in the federal funds rate would likely have to come with evidence of a slowing economy.

- David Payne

What changed in the June FOMC statement?

Changes to the FOMC's latest policy statement include the following:

The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated. (Previously read: The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.)

Uncertainty about the economic outlook has diminished but remains elevated. The Committee is attentive to the risks to both sides of its dual mandate. (Previously read: Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.)

- Karee Venema

A dovish Fed hold?

The Fed's decision to keep the federal funds rate unchanged is a "dovish hold that keeps the door open to rate cuts in the second half of 2025," says Dan Siluk, head of Global Short Duration & Liquidity and portfolio manager at Janus Henderson Investors.

Siluk notes that the FOMC is indicating it is not in a rush, "but is prepared to act if inflation continues to ease and labor market softness deepens."

He adds that the upward revision to inflation forecasts in the SEP "may temper expectations for aggressive easing," but its unchanged outlook for rate cuts this year "reassures markets that the Fed remains flexible."

- Karee Venema

Powell says they're seeing "some effects" of tariffs on prices

"We're beginning to see some effects" of tariffs on prices, Powell said during his press conference, adding that the Fed expects further impacts to show up in the coming months.

He noted that many companies are planning to ultimately pass on the added cost of tariffs to consumers in the form of price rises.

But, until the magnitude and extent of those price increases is clear in the economic data, Powell emphasized that the Fed will hold off on any change to interest rates.

- David Payne

Related: Walmart Raising Prices Soon — Here’s Which Products Will Cost You More This Summer

Powell: The federal funds rate is appropriate at current levels, but the Fed is prepared to act when needed

When asked whether the Fed is concerned about signs of slowing in hiring, and whether that is a reason to cut interest rates sooner rather than later, Powell struck a phlegmatic tone.

The labor market is near full employment, he noted. Labor force participation, job creation and wage growth are "all at healthy levels" right now, he argued.

The slow pace of home sales and strained home affordability are concerns, he said, but that is a longer-term problem that will take time to resolve.

For now, Powell said, the Fed's interest rate level appears appropriate based on where the economy is, but he emphasized that the Fed is well-positioned to respond if the economy starts to weaken significantly.

- Jim Patterson

The Fed can't cut rates right now because it expects inflation to pick up, Powell says

"We expect a meaningful amount of inflation to arrive in the coming months," Powell said, due to the gradual effect of new tariffs, which means the Fed doesn't think it can cut interest rates yet.

Normally, with expectations for the economy to slow and for job creation to ease, the central bank might be cutting rates now to provide a bit of a cushion.

However, Powell wants to guard against inflation flaring up again and says the Fed needs more time to see how the cost of tariffs filter through to the retail prices that consumers pay.

In other words, the Fed is on hold for now, on alert for either a slowing economy or inflation that rebounds to an uncomfortable level.

- David Payne

Stocks turn lower as Powell speaks

The main indexes have swung lower as Fed Chair Powell speaks. At last check, the Dow, S&P 500 and Nasdaq are all down roughly 0.1%.

Meanwhile, yields on the 2-year and 10-year Treasury notes have edged higher.

- Karee Venema

Powell: Price stability is "the ultimate thing" the Fed can do

"The best thing that we can do for the public that we serve is to restore price stability" to 2% inflation, plus full employment, Powell said. "That is the ultimate thing we can do."

So, despite widespread longing among consumers and businesses for lower borrowing rates, Powell emphasized that the Fed can't help deliver that yet.

It needs to understand what will happen to inflation as tariffs trickle through the economy, a process he says the Fed itself does not understand well.

Only once it's confident that tariffs are not pushing up inflation will the Fed move to trim borrowing costs.

- Jim Patterson

Powell makes a plug for funding government data

The closest Powell came to commenting on Washington politics: Expressing concern that federal agencies that collect and publish data are seeing their headcounts reduced as part of the administration's efforts to shrink the federal labor force.

Having data that is both abundant and accurate is critical for the Fed in gauging how the economy is doing, and by extension, how it should conduct monetary policy.

For a Fed chair so allergic to ever answering reporters' questions about his thoughts on politics, this was a noteworthy departure.

- Jim Patterson

Powell talks AI

Asked whether he's concerned about artificial intelligence possibly wiping out a lot of jobs, Powell said that "AI should be creating jobs," noting what a powerful tool it is becoming.

But it's "really hard to know" whether AI will ultimately make workers more productive, or make them redundant.

For now, he said the Fed doesn't have a formal viewpoint on this, but it's something to watch for the long-term direction of the labor market.

- Jim Patterson

We'll remain data-dependent, Powell says

"We don't rule things in or out" when it comes to expecting interest rate cuts or hikes, Powell said.

"We do the best we can" with the data available, and continually evaluate that data as he and his colleagues decide whether to change their benchmark rate or leave it steady.

The overwhelming message from Powell today: The Fed won't be pushed into taking any action that it thinks is premature, and it is confident that the economy is solid enough now that it can handle that wait-and-see approach.

- Jim Patterson

June Fed meeting: What the experts are saying

With the June Fed meeting now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the outcome and what it could mean for investors going forward.

"On paper, the setup for this Fed meeting is far less interesting than the economic and geopolitical backdrop. As expected, the Fed took no action today, but revised inflation forecasts higher and growth lower, showing the Fed continues to be torn between serving its dual mandates." – Christian Hoffmann, Head of Fixed Income Thornburg Investment Management

"Much like the tariff talk, the Fed has pivoted to a more of a kick the can down the road narrative as uncertainty may have diminished, but it's still elevated according to their terms. Expect them to go “one meeting at a time” until there is more certainty with tariffs. Right now, the outlook for a cut at the earliest is September. For them to hit the projected 2 cuts by year-end looks murky at best." – Jay Woods, Chief Global Strategist at Freedom Capital Markets

"We continue to expect a delayed monetary policy response with immigration policy, reshoring of manufacturing production, and budget and deficit concerns likely to drive real rates and expected inflation higher. The economy is less rate sensitive, and we believe a significant amount of easing would be required to impact consumer behavior." – Eric Teal, Chief Investment Officer for Comerica Wealth Management

"While the Fed is getting pressured to move on rates, the U.S. economy is proving more resilient than expected. The current consensus growth forecast for the U.S. in 2025 is down to just 1.4%. Given the most recent inflation reading of 2.4%, that would mean the lowest nominal growth rate since 2020. The next revision to U.S. growth could be higher, and that warrants waiting." – Scott Helfstein, head of Investment Strategy at Global X

"The Fed's dot plot reveals a clear trend toward stagflationary pressures, a scenario where economic growth slows while inflation and unemployment remain uncomfortably high. This environment looks particularly favorable for bitcoin, which can thrive as a potential hedge against inflation, and doesn't depend on broad economic growth for positive price action." – David Hernandez, Crypto Investment Specialist at 21Shares

- Karee Venema

Stocks barely budge after Fed meeting

This week's Federal Open Market Committee meeting ended as just about everybody expected it would: with the federal funds rate at 4.25% to 4.50%.

Stocks were mixed but mostly positive, with Visa (V, -4.9%) dragging both the S&P 500 and the Dow Jones Industrial Average just into the red but the Nasdaq Composite rising only 0.1%.

Price action this Fed Day was at least as much about monetary policy as it was about Israel, Iran and whether President Trump will involve the U.S. in what remains a regional conflict.

And Fed Chair Powell did his level best to play it straight during his post-meeting press conference.

"From my standpoint, it's not complicated. Everyone on the committee wants a good solid economy with price stability," he said.

"The economy has been resilient," Powell said. "That's what matters to us. It's pretty much all that matters," he said.

"Despite higher inflation projections," observes Morgan Stanley Wealth Management Chief Economic Strategist Ellen Zentner, "the Fed still expects to cut rates twice this year, interpreted as slightly dovish by markets."

All the mystery is pricing out of the next Fed meeting, with fed funds futures now reflecting an 89.7% probability of more wait-and-see behavior come July 29-30, and that's up from 66.9% as of May 16.

With the Fed's Summary of Economic Projections showing two rate cuts over the balance of 2025, traders have raised the probability of a 25-basis-point move after the September 16-17 FOMC meeting from 53.1% yesterday to 60% today.

There can be no rate cut in August because Fed Chair Jerome Powell and his fellow monetary policymakers will gather with other luminaries of economics, finance and politics for the annual Jackson Hole Economic Symposium.

Zentner explains that solid economic footing will allow the Fed to remain patient and await greater clarity before cutting interest rates.

"Markets will need to be patient as we await incoming data that will reveal the extent to which tariffs will drive higher inflation and slower growth," Zentner concludes.

- David Dittman

Related: Stock Market Today: Stocks Grapple for Peace Trade Gains

According to the Bureau of Labor Statistics, headline CPI was up 0.1% month over month in May, slower than April's 0.2% rise and the 0.2% increase economists expected.

The CPI was 2.4% higher year over year, a tad bit quicker than the 2.3% increase seen the month prior and in line with economists' projections.

Shelter was the "primary factor" for the increase in headline CPI, according to BLS, up 0.3% on the month. Energy costs, meanwhile, were down 1% in May as gas prices declined.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.1% from April to May and 2.8% year over year. Both figures came in below the 0.3% and 2.9% increases economists called for.

"The impact from tariffs did not officially arrive as expected in the May CPI release, with core goods seeing no price increases last month," says Jeff Schulze, head of economic and market strategy at ClearBridge Investments."

Schulze notes that some categories that are most exposed to Chinese supply chains saw a material boost, including toys and sporting goods. But "others, such as apparel and furniture, saw prices decline."

He adds that the Federal Reserve should "find solace" in the May CPI report, but will likely stick to its "'wait-and-see' messaging at next week's meeting."

This morning's inflation report, alongside news that the U.S. and China have reached a trade deal, is doing little to move the needle on rate-cut expectations.

According to CME FedWatch, futures traders are now pricing in a 55% chance the Fed will issue its next quarter-point rate cut at its September meeting, little changed from a week ago. The betting odds are for just one additional rate cut by the end of the year.

As for the next Fed meeting, which kicks off next Tuesday, June 17, and concludes on Wednesday, June 18, it's all but guaranteed that the central bank will hold interest rates steady.

With the May CPI data now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

Experts' takes on the May CPI report

"Inflation in May was lower than anticipated, suggesting the tariffs aren't having a large immediate impact because companies have been using existing inventories or slowly adjusting prices due to uncertain demand. If inflation stays under control or the job market weakens, the Federal Reserve will likely consider cutting interest rates down the road." – Alexandra Wilson-Elizondo, Global Co-CIO of Multi-Asset Solutions at Goldman Sachs Asset Management

"With lower-than-expected numbers across the board (with the exception of headline YoY, which stayed constant), and a trade deal with China that was agreed to in London, the narrative around tariff-induced inflation should subside. However, CPI remains above 2% and even though the tariff rates are going to be less than originally feared ... they will further increase the cost of goods. Because of this and the tariff pause that's scheduled to be lifted next month, we are still cautious." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"Another month goes by with little evidence of tariffs, but the longer-term inflation challenge they pose remains. Given the Fed likely shares that outlook, no one should be looking for rate cuts in the near future." – Ellen Zentner, Chief Economic Strategist for Morgan Stanley Wealth Management

"The jury is still out on the economic effects from tariffs. It will take one, maybe two more months for both the initial pull-forward and eventual lag in demand to be crystallized and show up in the economic data. The Fed is taking the summer off. They will come back in September with three more CPI and jobs prints in their data trove. If unemployment moves towards 5% and inflation is under 3%, they will likely cut at least 25 bps [basis points] in September." – Skyler Weinand, Chief Investment Officer at Regan Capital

"Tariff collections in May 2025 were about 3x higher versus May of 2024 and 2023, so we know they are being paid … but they didn't really show up in consumer prices last month. Maybe that's a reflection of pre-tariff inventory builds, but we need to continue monitoring corporate profit margins as closely as we're monitoring consumer inflation data to understand how and where this is transmitting to the economy." – Elyse Ausenbaugh, Head of Investment Strategy at J.P. Morgan Wealth Management

"Shelter and energy are going to keep the disinflation trend intact – prices are moving down in two of the largest categories, so investors should expect further declines in inflation in the coming months." – Jamie Cox, Managing Partner for Harris Financial Group

"Today's CPI report likely does not change the Fed's thought process heading into next week's FOMC. Changes to monetary policy remain on hold for now, with a base case penciling in two rate cuts for the back half of 2025. This allows the Fed to get a better handle on how the U.S. economy is digesting a higher tariff regime through the summer months. The next big market catalyst is likely to be next week's dot plot, which will be heavily scrutinized by investors for subtle signals as to where monetary policy may be heading." – Jason Pride, Chief of Investment Strategy and Research at Glenmede

"Despite sticky inflation, tariffs have not yet shown up in consumer prices, but a lot depends on the absorption rate of U.S. companies and foreign suppliers. We believe that the majority of the tariffs will eventually get passed to the consumer, but companies are cautious at this juncture about passing along the price increase." – Eric Teal, Chief Investment Officer for Comerica Wealth Management

Related content

• Kiplinger's Economic Calendar for This Week
• How Inflation Is Impacting Retirees in 2025
• 10 Cities Hardest Hit By Inflation: Did Yours Make the List?

Tariffs and trade policy make many headlines these days. But less is written about the current state of U.S. trade — the size and nature of our trade deficit, what drives it, what things the U.S. imports (or exports) a lot of, what we do and don’t build.

Let’s take a look at the scale of U.S. imports and exports, where domestic manufacturing is growing, and whether more can be made here. The political debate over the president’s trade policies is fierce. Much less is said about how things stand now. You may find the following facts and outlooks useful.

Size of the trade deficit

Last year’s trade deficit totaled $918 billion, worth about 3% of U.S. GDP. That’s the value of exports minus imports, for both goods and services. The U.S. has run an annual trade deficit, of varying sizes, every year for 50 years. The U.S. runs a large deficit between the goods it imports and exports. When it comes to services, America is a net exporter, running a surplus of almost $300 billion last year. (More on the burgeoning services surplus below.)

Top manufactured exports

America’s consumption of imported goods leads to a common complaint: That the country doesn’t make much here anymore. Consumers see items labeled “Made in China” and understandably think U.S. factory output has fallen. Yet the U.S. is the second-largest manufacturer, with China first. Production has shifted away from lower-cost consumer products in favor of capital equipment, which consumers seldom see. Our domestic industrial output is nearly as large as all of Europe’s combined. Manufacturing has fallen to just 10% of U.S. GDP, but that is because service industries have grown so rapidly in recent decades.

Despite our trade deficit, we are the largest exporter after China, due to our mix of high-value manufacturing and abundant natural resources. Some of our top manufactured exports: Industrial and farm equipment. Engines and generators. Electrical gear. Instruments used by many industries. Computers and accessories. Telecom components. Aircraft. Pharmaceuticals.

Oil and gas
The domestic boom in oil and gas has unleashed a gusher of exports of petroleum. 20 years ago, the U.S. imported a net 13 million barrels per day. Now, we export 3 million bpd more than we import. Similarly, with natural gas, the U.S. is now the world’s largest exporter of liquefied natural gas. New terminals to export even more are being built, which could up foreign LNG sales by a third.

Service industry
The digital age has let the U.S. play to one of its strengths: Services. Services exports hit $1.1 trillion last year, up from $769 billion in 2015. Most of that growth has been driven by the internet’s ability to distribute services around the world, especially in IT, finance and insurance. Think software licenses, cloud computing and data storage, along with industrial services made possible by the internet, such as precise logistics and licensing of U.S.-made equipment. U.S. manufacturers are the No. 2 exporter of these “digitally enabled” services.

Agriculture
One traditional export strength that not everyone realizes is slipping: Agriculture. Long the world’s chief source of exported food and feeds, the U.S. has begun running trade deficits in farm goods. Why? The strong dollar, stiff competition from Brazil and rising consumption of things not grown here.

Areas of growth

Let’s turn to some sectors where the U.S. has room to make and export more.

Chemicals
The U.S. is the world’s second-largest producer of chemicals by volume, generating 250 million tons last year, compared with 1.3 billion tons for No. 1 China. America’s energy abundance provides it with a key advantage, since fossil fuels, especially natural gas, are used as both energy sources and feedstocks.

Chemicals are one of the few goods sectors where the U.S. runs a trade surplus, which reached an estimated $25.7 billion last year. That trade surplus is also expected to persist, though the current upheaval in U.S. trade relations muddies that outlook. But for now, chemicals account for around 10% of U.S. goods exports. Top products: Pharma preparations. Plastic materials and resins. Petrochemicals. Ethyl alcohol.

Microchips
High-tech fields hold even more potential to fuel domestic manufacturing. Recent investments in new chipmaking capacity are enormous. After the U.S. saw its share of global chipmaking fall from 37% in 1990 to 12% today, a rebound is underway, driven by pandemic supply chain disruptions and funding from Congress. As of last year, there were 90 new chip projects in development, backed by $450 billion in investments (including about $50 billion from the 2022 CHIPS Act). New plants in Arizona by TSMC and Intel are either up and running or coming online soon to produce the cutting-edge chips that historically have been made in Taiwan. Intel is also considering huge manufacturing investments in Ohio, while Micron is working on new memory chip plants in Idaho and N.Y.

As a result of all this, U.S. chipmaking capacity is on track to triple by 2032, with an emphasis on domestic production of the most advanced chip designs. There are challenges, admittedly. Hiring enough skilled technicians will be hard. And chipmaking plants require tons of electricity. The U.S. grid is already coming under capacity strains.

Aerospace
Then there’s aerospace, which is growing by leaps and bounds as firms race to deliver high-speed internet and other services from huge arrays of small satellites. SpaceX is the dominant player for now, due to its Starlink internet service. It has a massive, just-expanded facility in Texas to build millions of satellite dishes, it builds thousands of satellites in Redmond, Washington, and it makes rockets in Texas and California. It is breaking ground on a new factory in Florida this year to build Starship, the largest rocket ever. Meanwhile, Amazon is gearing up to challenge SpaceX, with plans to build thousands of satellites and millions of satellite-internet antennas.

Defense
Related to aerospace, the U.S. remains the world’s premier defense exporter, dominating the global trade in weaponry, with Russia, China and France far behind. A silver lining of the actual and potential conflicts roiling the world is steady demand for military hardware for the foreseeable future. The U.S. doesn’t lead in every type of weapon, but many of our systems are recognized as world-class. The big challenge will be keeping up with demand from both our military and friendly foreign militaries.

Challenges: The need for skilled workers

One thing these specialized, high-tech industries will all need to grow: High-skilled workers, from engineers to tradespeople and machine operators. It’s hard to imagine the return of factories employing masses of assembly line workers. But the need for specialized, educated workers is clear. Worries about labor shortages are already cropping up and will worsen without enough young people getting degrees in STEM fields or going into skilled trades. Fortunately, interest among high schoolers in vocational training programs appears to be picking up. The president’s proposal to boost skilled-trade apprenticeship programs could also help if it gets implemented.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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For 40 years, I have written that it is dumb to make quick portfolio decisions based on political and international events. And I have been correct to believe that when reliable investments get indiscriminately slammed, there is enough smart money to undo some of the damage.

That is the DNA of my three-day rule, which holds that in any news-driven plunge, sober-minded buyers will arrive in roughly 72 hours wielding significant sums of cash.

The exception was the crash of 2008, and that was because multiple banks went bust and Wall Street had no rescue money. Bank failures and widespread bond defaults are crushing. Fortunately, with the U.S. economy borderline booming entering this year, the banks seem sound.

But the trade war and, worse, the utter confusion about what it is supposed to achieve and on what timetable stand to undermine all my time-tested doctrines. I wish I were confident that financial markets will push back enough to influence the policymakers.

But all indications say that this is not a three-day story. S&P 500 companies earn 40% of their profits outside the U.S. And America's fixed-income markets depend more than before on overseas buyers looking for higher yields along with the comfort of owning debts denominated in strong dollars.

For now, I expect a rush to find both relative protection from the protectionists and the most-secure cash flows. The consensus is that economic growth will slow if not roll over into a recession, and inflation will head back up above 3%.

Long-term interest rates may fall further for a while on fear, but this stagflation implies they will eventually climb. Do not fall for the temptation to buy long-term Treasuries or bond funds, including high-yield bonds, which are closely correlated to stock prices. Feel free to lighten up on those assets, too.

The least bad options

So, then, what else do I suggest? I'll highlight four ideas that start with D – as in detergent, diesel, dividends and dollars (meaning cash and cash equivalents). But even these might be just the least bad options.

In early April, as shell-shocked shareholders watched the stock market disgorge trillions of dollars, detergent, which is shorthand for Procter & Gamble (PG) and other makers of consumer staples, withstood the worst, as did utilities and high-dividend names such as AT&T (T) and Verizon (VZ).

Low-volatility dividend funds such as the Franklin U.S. Low Volatility High Dividend Index (LVHD) and the Federated Hermes Strategic Value Dividend (SVAAX) are keepers.

Diesel, by which I mean fuel handlers such as pipelines, is under pressure from fast-falling oil prices. But the cash flows from the volume of energy use are reasonably predictable, so you can expect high dividends.

The best D of all for now is dollars, as in cash or ultra-short-term bond funds such as the Fidelity Low Duration Bond Factor (FLDR).

The Federal Reserve may cut interest rates in the coming months to support employment, so you might be wise to lock in CD and Treasury-bill ladders sooner rather than later.

But there are no sure things in the short run. I've seen a lot in my long career. This breaks the norms.

This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Since 2018, the European index has beaten the U.S. index in only one year, 2022. But in 2023 and 2024, the U.S. beat Europe by an average of some 15 percentage points.

Europe's markets have done poorly because Europe's economy has been puttering along with minuscule growth, and Europe's companies have, with some important exceptions, lacked the drive and innovation of U.S. firms.

So why on earth am I recommending the stocks? First, Europe is being shaken out of its lethargy, militarily and otherwise, mainly by Donald Trump's changes in U.S. policy. Second, Europe's economy and its businesses are improving. Third, European stocks are cheap.

I am not the only one recognizing Europe's investment potential. Despite recent market turmoil, so far this year, the iShares Europe (ticker symbol IEV, $52), a broadly diversified exchange-traded fund, has returned 0.10%, compared with a loss of 13.6% for a U.S. equivalent, the SPDR S&P 500 (SPY). (Prices and other data are through April 7; investments I like are in bold.)

U.S. stocks have dropped for several reasons, including the persistence of inflation. But in my view, the main issue is that investors are spooked by the Trump tariffs.

Like the rest of the world, as a trade war breaks out, Europe will suffer. But Europe is in a relatively good position because of the strength and history of the European Union as the world's largest trading bloc, with more than 440 million consumers and $4 trillion in trade among the 27 EU countries themselves.

With the Trump administration attempting to reduce the commitment of the U.S. as the world's military leader, European nations – notably Germany, Poland and the Scandinavian countries – are taking steps to fill the gaps, to the potential benefit of Europe's own defense and aerospace businesses.

Estimates are that Europe will need 300,000 more troops and nearly $300 billion in additional defense spending in the short term to deter Russia. Whether Europe has the will or the desire to spend the money is still uncertain, but the markets have responded in the affirmative.

Consider European defense, bank stocks

When I wrote about defense stocks recently, I mainly recommended U.S. companies. But as the new administration's national security policy has unfolded, European defense and aerospace stocks have been by far the best performers.

You can invest in them through their American depositary receipts (ADRs), which are bank securities that represent the actual foreign shares.

The stock of U.K.-based BAE Systems (BAESY, $77), which specializes in electronic warfare, has jumped 35% since the start of the year. Italy's Leonardo (FINMY, $21), which makes helicopters and cybersecurity tools, has soared 59%.

ThyssenKrupp (TKAMY, $9), a 213-year-old German industrial firm with a marine component that it plans to spin off, is up 124%. France's Thales (THLLY, $50), a diversified defense technology company, has risen 75%.

Unlike many other European stocks, these firms are no longer cheap, and while I don't believe in market timing, it may be prudent to wait and gauge the market effects of tariffs. Still, they are well-run companies that deserve to be on your buy list.

In a recent report, Morgan Stanley pointed out that "Europe is meaningfully outpacing the U.S. in positive 'economic surprises,' with economic data coming in better than analysts expected."

Bank profitability, according to the firm, is hitting record highs. The banking sector, in fact, is a good way to buy Europe as a whole, and attractive stocks abound.

The STOXX Europe 600 Banks Index has risen 4.1% for the year to date, compared with a decline of 14.5% for the Dow Jones U.S. Banks Index.

Among the best European banks is Milan-based UniCredit (UNCRY, $24), a business lender and wealth-management specialist with a strong presence in eastern and central Europe, where growth is brisk. The stock has returned 19% so far this year, and it carries a dividend yield of 6.9%.

BNP Paribas (BNPQY, $36), the largest French bank, has returned 18% and sports a yield of 7.2%, with a single-digit price-earnings ratio. Spain's Banco Santander (SAN, $6), based in the large EU nation that's growing the fastest, has gained 25%; it has a price-to-earnings (P/E) ratio of 7.

I especially like Brussels-based KBC Group (KBCSY, $39), which focuses on serving small to midsize businesses and, like UniCredit, recognizes the opportunities in the eastern half of the continent.

KBC is among the top 10 holdings of the Brown Advisory WMC Strategic Europe (BIAHX), one of the best of the managed European stock funds. Its expense ratio is 1.2%, but it's worth it.

Also in the portfolio: AIB Group (AIBGY, $12), a 200-year-old financial services firm that mainly operates in Ireland and the U.K. It has a low P/E, with a 7.0% dividend yield.

European bank stocks, as opposed to defense stocks, are bargains. So are European stocks in general. The average component of the MSCI Europe Index recently traded at a P/E, based on analysts' estimates of earnings for the year ahead, of just 14.

For the MSCI USA Index, the average P/E is 21. European stocks have an average dividend yield of 3.1%; U.S. stocks, 1.4%.

Avoid potential casualties

Most of Europe's largest companies – including pharmaceutical giants such as Novo Nordisk (NVO) and Roche (RHHBY), as well as LVMH Moët Hennessy Louis Vuitton (LVMUY), the luxury-goods conglomerate – sell their products all over the world, especially in the U.S. and China.

They will be hurt by what I believe will be slower economic growth in those countries in a trade war. Instead, look for businesses such as banks that are mostly Europe-focused.

Or look for smaller retail stocks. Consider Dino Polska (DNOPY, $57), which runs midsize grocery stores in Poland, one of the fastest-growing European countries.

Helsinki-based Kesko (KKOYY, $10) sells groceries, electrical supplies and automobiles in Finland and the rest of northern Europe and sports a 5.4% yield. Jeronimo Martins (JRONY, $42) owns a wide range of supermarkets, health and beauty stores, and restaurants in its home market of Portugal, as well as in Poland.

Finally, utility stocks are both Euro-centric and likely to be shielded from tariff wars. They are also benefiting from rising demand from electric vehicles and data centers.

Spain-based Iberdrola (IBDRY, $63), the largest in the sector by market cap, has been growing fast and carries a 3.9% yield.

For a smoother ride, check out Vienna's Verbund (OEZVY, $14), a smaller utility with sizable investments in wind and solar. Share prices have been static over the past few years, but the yield is 5.4%.

With the U.S. reducing its presence geopolitically, will this be Europe's decade? We'll have to see, but I am optimistic about European stocks for the first time in years.

James K. Glassman chairs Glassman Advisory, a public-affairs consulting firm. He does not write about his clients. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence. He owns none of the securities mentioned here. You can reach him at JKGlassman@gmail.com.

This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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According to the Bureau of Labor Statistics, headline CPI rose 0.2% month over month in April, faster than March's 0.1% decline and in line with economists' projections.

However, the CPI was up 2.3% year over year, slower than the 2.4% consensus estimate and the lowest reading since February 2021.

Shelter accounted for more than half the monthly increase, rising 0.3% from the month prior. Energy costs rose 0.7% amid upticks in natural gas and electricity, though this was slightly offset by a drop in gas prices.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.2% from March to April and 2.8% year over year. The monthly figure came in lower than the 0.2% gain expected by economists, while the annual increase matched forecasts.

"Today's CPI report is a welcome sign that inflation does not appear to be a major concern ahead of tariff impacts," says Jason Pride, chief of investment strategy and research at Glenmede.

Pride adds that today's data are unlikely to change the Fed's plans for rate cuts. "The relative health of the labor market affords it the ability to take a patient approach as the effects of tariffs begin to work their way through the economy," he says, adding that his base case is for three cuts in the back half of this year.

News that the U.S. and China have drastically reduced reciprocal tariffs for 90 days as they continue trade talks has already put a dent in rate-cut expectations.

According to CME FedWatch, futures traders are now pricing in a 52% chance the Fed will issue its next quarter-point rate cut at its September meeting, up from 28% a month ago. The betting odds are for just one additional rate cut by the end of the year.

As for the next Fed meeting, which runs June 17-18, it's widely anticipated that the central bank will hold interest rates steady.

With the April CPI data now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

Experts' takes on the April CPI report

"The wide range of estimates coming into today's CPI report underscores the difficulty for market participants to size the significant uncertainty facing both corporations and consumers. Prior to the release, we were closely monitoring the data for initial indications of tariff impacts on inflation, specifically focusing on the tension between goods prices and softening demand for certain services like travel." — Alexandra Wilson-Elizondo, global co-head and co-chief investment officer of Multi-Asset Solutions within Goldman Sachs Asset Management

"Fears of slowing growth and a recession caused by punitive tariffs drove markets lower in the first week of April, but they've rebounded on the heels of a tariff pause and a Chinese trade breakthrough, and now a better-than-expected inflation report removes the last big overhang for the market. We're still concerned that high valuations and market concentration remain risks to much higher stock prices this year, but in the short run, markets should love this data and continue yesterday's (China-trade) celebration." — Chris Zaccarelli, chief investment officer for Northlight Asset Management

"Given the overarching tariff situation, this was probably one of the least important CPI prints since the inflation spike of 2022. Inflation from the new tariffs announced on Liberation Day (April 2) will not likely show up until at least next month or perhaps even June's readings. What today's benign inflation numbers do mean is that the Fed will be on hold for the foreseeable future, given that inflation continues to drop and unemployment is steady." — John Kerschner, head of U.S. Securitized Products & Portfolio Manager at Janus Henderson

"The initial inflation reading is probably reassuring for markets, increasing the likelihood the Fed moves to drop rates to counter downward revisions to growth. At the same time, surveys have shown an increase in near-term inflation expectations that are still concerning as tariffs move through the system." — Scott Helfstein, head of Investment Strategy at Global X

"Today's release should not shift the Federal Reserve's thinking, and importantly, the May CPI report will come out before the June FOMC meeting. Like the Fed, investors are likely to look through today's report as the prospect of trade deals and details on the budget reconciliation process are more material drivers for equities in the coming weeks. However, the absence of a negative with today's print does lend to incremental upside for risk assets as hedges are unwound." – Josh Jamner, investment strategy analyst at ClearBridge Investments

"The latest inflation data indicate that price growth continues to slow overall. This trajectory may experience some bumps along the way, but recent developments in trade talks suggest the impact from tariffs could be less jarring than expected. That said, nothing is currently certain. If the past few months have taught us anything, it's that the state of play can change rapidly. Across the economy (and even at the Fed), there is likely an understandable reluctance to make big decisions." — Elizabeth Renter, senior economist at NerdWallet

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According to the Bureau of Labor Statistics, nonfarm payrolls rose by 177,000 in April. This was lower than March's downwardly revised 185,000 figure but more than the 133,000 new jobs economists expected. February jobs growth was also lowered, by 15,000.

Job gains in April were seen across the health care (+51,000), transportation and warehousing industries (+29,000), and financial activities (+14,000). However, government employment declined by 9,000, and is now down by 26,000 since January.

The unemployment rate, which is calculated from a separate survey, remained at 4.2%.

The data also showed that wage growth was up 0.2% month over month in April and 3.8% year over year.

The April jobs report "underscores resilience in the U.S. economy," says Joe Gaffoglio, CEO and president at Mutual Of America Capital Management, "but cracks have been forming. Job openings continue to decline, and steady quit rates suggest workers are growing less confident about jumping to new roles."

Gaffoglio notes that the ongoing job market momentum will be closely watched going forward, "given the more cautious stance by both companies and workers."

And "despite growing economic headwinds, Fed Chair Jerome Powell signaled he was in no rush to cut rates, with inflation above the Fed's target and a labor market that's holding firm, at least for now."

Market participants have resigned themselves to lowered rate-cut expectations too. According to CME FedWatch, futures traders are pricing in a 99% chance the Fed keeps the federal funds rate unchanged when it meets next week. And odds of a June rate cut are now at 46% – down from 55% one day ago.

With the April jobs report now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

Experts' takes on the April jobs report

"With today's jobs report soundly beating expectations, we can all see hiring hasn't hit the brakes – but it has downshifted one gear lower. We've seen price pressures ease in talent attraction costs in recent months, which means there's more balance between supply and demand in the labor market. Right now, companies are taking a measured wait-and-see approach in response to recent market volatility and the threat of tariffs. And even in cases where companies have slowed hiring in the immediate term, they aren't changing their overall hiring and growth plans – they're delaying them temporarily." – Adam Stafford, CEO of Recruitics

"Strong jobs data puts a spring in the Fed's step. Despite an increasingly uncertain economic backdrop, the U.S. labor market remained resilient in April with employment surprising to the upside and the unemployment rate remaining steady. In the here and now, solid labor market data provides the Fed with scope for patience. With the forward-looking outlook having deteriorated, however, today's data feels somewhat backward-looking and the risks remain that a weakening economy could see the Fed resume its easing cycle later in the year." – Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management

"Today's jobs report is a biggie. Over the last few weeks, we've seen the first indicators in the labor market that uncertainty created by global trade policy has started to impact frontline workers. The number of shifts being worked at U.S. businesses once again grew, though at a slightly slower rate than we've seen the last couple of months. Today's data comes as a pretty big surprise, as businesses simply weren’t expected to hire at this rate, especially to meet a very short-term spike in demand as everyone prepares for an uncertain future." – Dr. Edward Hearn, Ph.D., lead economist at UKG

"Markets breathed a sigh of relief this morning as the jobs data came in better than expected. We've already seen how financial markets will react if the administration moves forward with its initial tariff plan, so unless they take a different tack in July when the 90-day pause expires, we will see market action similar to the first week of April. If adjustments can be made and the new approach is more nuanced, with exemptions for activity that leads to the administration's ultimate goals and more reasonable tariff levels, then the real economy can re-adjust and markets will take it in stride, however, we aren't out of the woods yet, because it's unclear how much different the U.S. trade approach will be in the second half of 2025 versus what we've seen year to date." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"April's job figures defied expectations of economic frailty following a negative Q1 GDP report. However, with the negative GDP largely due to a surge in imports and reduced government spending, this print indicates potential ongoing discrepancies between hard and soft data. Unfortunately for those wanting lower rates, this beat will make it hard to see the Fed pushing cuts up earlier in the year. Fixed-income markets are adjusting back to the higher for longer narrative. For investors, remaining invested in quality companies and looking for risk-adjusted spreads should be a priority. Only trade resolutions will stabilize markets, staying invested remains the mantra in the meantime." – Lara Castleton, U.S. Head of Portfolio Construction and Strategy (PCS) at Janus Henderson Investors

"The April jobs report shows that the labor market was on solid footing as trade war tensions became more disruptive early last month. The data for this release was collected during the week following Liberation Day, meaning it would be too soon to expect substantial fallout to emerge just as higher tariffs were being implemented. As a result, investors are likely to look through this positive print, viewing it as a 'calm before the storm' with strength being downplayed given the known headwinds that the labor market will be facing in the coming months." – Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments

"No signs of tariff stress in the labor market yet – strong hiring and stable wages. If you are going to embark on a trade war and your economy is consumption-based, this is the leverage you want." – Jamie Cox, Managing Partner for Harris Financial Group

"Although markets had braced for a slowdown in job growth – due to factors like DOGE job cuts, increased immigration reform, and soft economic indicators – private sector hiring has remained resilient. The stronger-than-expected employment figure gives the administration more breathing room in its trade negotiations, as risk assets are likely to respond favorably. However, with the unemployment rate holding steady, the Federal Reserve is unlikely to shift its current policy stance in the near term." – Kevin O'Neil, Associate Portfolio Manager & Senior Research Analyst for Brandywine Global

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The Federal Open Market Committee (FOMC) did not cut interest rates this time around, as expected.

And while the FOMC statement called attention to increasing uncertainty about the economic outlook, Federal Reserve Chair Jerome Powell said the U.S. economy remains strong enough at the moment to allow patience on the part of policymakers.

The Kiplinger team reported live on the May Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy and your money. Join us again in June for the next Fed meeting.

| After the Fed Meeting, Seven High-Yield Savings Accounts Worth Your While | What's Happening With Trump Tariffs? New Rates and Trade Talks | When Is the Next Fed Meeting? |

Can Trump fire Powell?

In addition to upending the global economy with his tariffs, President Donald Trump has introduced additional uncertainty for financial markets by undermining the independence of the Federal Reserve and Fed Chair Jerome Powell in a series of public attacks.

His behavior could render moot whatever the result of a pending Supreme Court review of a 90-year-old case that could answer the question, can Trump fire Powell?

Last week, President Trump called Chair Powell a "major loser" and suggested the Fed cut interest rates last September to help former President Joe Biden.

In Michigan on Tuesday to celebrate the first 100 days of his second administration, the president refreshed his assault.

"Interest rates came down despite the fact that I have a Fed person who's not really doing a good job but I won't say that, I want to be very nice," Trump told his rally crowd.

"I want to be very nice and respectful to the Fed," he continued. "You're not supposed to criticize the Fed, you're supposed to let him do his own thing.

"But," he concluded, "I know much more than he does about interest rates, believe me."

- David Dittman

Q1 GDP unexpectedly declines

In its initial estimate of first-quarter gross domestic product (GDP), the Bureau of Economic Analysis said economic growth decreased at an annual rate of 0.3% as imports jumped 41.3%.

If this holds through to the third reading, it will mark the biggest drop in GDP since Q1 2022. Economists expected a 0.4% increase in economic growth.

"The economy weakened in the first quarter," says Bill Adams, chief economist for Comerica Bank. "Businesses and consumers pulled forward purchases to get ahead of tariffs in the first quarter, and throttled back spending and investment plans in other areas."

Adams notes, though, that today's reading doesn't tell us much about the current state of the economy, given all of the announcements and changes that have taken place since the start of the month.

The economist feels the uncertainty will keep the Fed on hold this month, but he says a June rate cut is on the table.

- Karee Venema

The Fed is unlikely to cut interest rates this time

The Federal Reserve is not likely to change rates at its meeting next Wednesday, despite the modest contraction in first-quarter GDP.

Price and wage data through March have been encouraging, but the Fed is concerned that price increases caused by April tariffs may raise inflation expectations. There has been evidence in consumer sentiment surveys of exactly that.

If the economic contraction gets worse, the Fed could cut rates a quarter point at its June 18 meeting, or the one after that, on July 30.

However, that will be determined by how the Fed weighs the balance of risks between a slowing economy and rising inflation.

- David Payne

How will the March PCE report impact the Fed's interest rate decision?

In March, both headline PCE and core PCE, which excludes volatile food and energy costs, were flat month over month, a slower pace than what was seen in February.

Year over year, headline PCE rose 2.3%, faster than the 2.1% increase economists expected. Core PCE also came in higher than anticipated, at 2.6%.

The data also showed a sharp uptick in consumer spending (+0.7% in March vs 0.1% in February).

"This inflation report, coupled with this morning's disappointing GDP figures, creates significant pressure on the Federal Reserve ahead of next week's crucial policy meeting," says David Hernandez, crypto investment specialist at 21Shares.

Hernandez adds that while markets have priced in no change to interest rates at the next Fed meeting, "today's mixed economic signals introduce fresh uncertainty into the equation."

According to CME FedWatch, futures traders are currently pricing in a 94% chance the FOMC holds rates steady next Wednesday. The odds for a June rate cut are at 60%.

- Karee Venema

What will the April jobs report say about the labor market?

The April jobs report will be released ahead of this Friday's open. It will give Federal Reserve officials the first glimpse of how Trump's retaliatory tariff announcement and reciprocal levies from several U.S. trade partners may impact the hard data.

"Hiring is often delayed when consumers are concerned about losing their jobs, or when businesses don’t know if there will be a positive return to investing in additional workers," writes David Payne in the Kiplinger jobs outlook.

In March, nonfarm payrolls rose by a robust 228,000, while February's jobs growth was upwardly revised.

This time around, Goldman Sachs economists believe the U.S. added a slightly above-consensus 130,000 new jobs in April, which they say reflects "a still-moderate pace of job creation."

The group also expects government payrolls to be unchanged, "as a likely decline in federal government positions offsets increases at the state and local levels.

And they say the unemployment rate stayed at 4.2%.

- Karee Venema

Fed officials signal support for a pause

Between the March and May Fed meetings, several Fed officials have signaled support for keeping the federal funds rate at its current range of 4.25% to 4.5%.

Speaking on April 23, Cleveland Fed President Beth Hammack said it is too soon to consider a rate cut in May, but the central bank could move later if there is clear and convincing evidence of a sharp labor market decline.

Hammack added that there remains a very high bar set for emergency rate cuts – the most recent occurred at the onset of the pandemic in March 2020 – and there is not enough of a market or economic breakdown at the moment to support one.

Meanwhile, on April 24, Fed Governor Christopher Waller said he doesn't expect the impact of tariffs to hit until July. However, Waller added that a significant decline in the labor market could encourage a rate cut sooner rather than later.

"To be sure, Fed officials have a strong consensus for not moving in the near term as the economic impact from tariffs is still unfolding and other aspects of the Administration's policies remain to be seen – namely, the upcoming tax bill being debated in Congress," write Deutsche Bank economists.

They anticipate the biggest impact from tariffs – higher inflation and lower growth – to occur in the back half of the year and do not believe the Fed will resume rate cuts until December.

- Karee Venema

Who votes on Fed rate cuts?

The Federal Open Market Committee (FOMC) – the Federal Reserve's policy-setting group – has 12 members, eight permanent and four who rotate each year.

The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed.

Four regional Fed presidents are rotated in each calendar year.

The 2025 FOMC voting committee consists of:

• Fed Chair Jerome Powell
• Vice Chair Philip Jefferson
• Fed Governor Michael Barr
• Fed Governor Michelle Bowman
• Fed Governor Lisa Cook
• Fed Governor Adriana Kugler
• Fed Governor Christopher Waller
• New York Fed President John Williams
• Boston Fed President Susan Collins
• Chicago Fed President Austan Goolsbee
• St. Louis Fed President Alberto Musalem
• Kansas City Fed President Jeffrey Schmid

In 2026, the presidents from Cleveland, Philadelphia, Dallas and Minneapolis will rotate in as FOMC voting members, according to the Federal Reserve.

- Karee Venema

Initial jobless claims are on the rise

The "price stability" part of the Federal Reserve's dual mandate is more front-of-mind for investors, traders and speculators as President Trump's tariffs begin to impact the global economy.

"Full employment" has been less of a concern, even amid slowed-down hiring and stagnating wage growth.

But the Department of Labor reported Thursday morning that initial jobless claims increased by 18,000 to 241,000 during the week ending April 26, well above a consensus estimate of 223,000.

"The Fed is far too sanguine on the labor market given the incoming data," writes Renaissance Macro Research Head of Economics Neil Dutta.

Initial claims for the prior week were revised from 222,000 to 223,000. The four-week moving average increased by 5,500 to 226,000. The previous week's average was revised up by 250 from 220,250 to 220,500.

Continuing claims increased to 1.916 million for the week ending April 19, their highest level since 2021.

According to Dutta, "The bigger story is that continuing claims keep rising roughly 5% year-over-year. As job finding rates remain low, spells of unemployment go up."

The "meaningful increase" in initial claims indicates "that continuing claims might be rising a bit more in the weeks ahead."

- David Dittman

The Bank of Japan cuts its growth forecast

On Thursday, the Bank of Japan (BOJ) cut its growth forecasts for this fiscal year, citing "extreme" uncertainty related to global trade policies.

The central bank now expects the Japanese economy to grow just 0.5% in the fiscal year ending March 31, 2026, down from 1.1% in January. It anticipates a slightly higher 0.7% growth rate for the following fiscal year.

The BOJ also kept interest rates unchanged at 0.5% for the second straight meeting.

Japan's officials are currently undergoing trade negotiations with the Trump administration, hoping to hash out a deal to lower tariffs on the country's exports of its auto and electronics parts.

"The series of tariffs must be reconsidered, as they are currently beginning to cause substantial damage to our nation's economy," said Ryosei Akazawa, Japan's economic minister, when he arrived in the U.S. earlier this week.

"We want to make as much progress as possible toward an agreement that fosters a win-win relationship," Akazawa added.

- Karee Venema

Treasury Secretary Bessent chimes in on rate cuts

Does the bond market agree with President Trump about rate cuts?

"Yes," according to Treasury Secretary Scott Bessent. "We are seeing that two-year rates are now below fed-funds rates," Bessent said Thursday morning on Fox Business. "So that’s a market signal that they think the Fed should be cutting."

Bessent had previously refrained from commenting on Federal Reserve policy.

As Nick Timiraos of The Wall Street Journal reports, "Two-year Treasury yields were below the Fed's short-term rate for all of 2023 and much of 2024."

The market saw the Fed engineering "a soft landing that brought inflation down without a recession," Timiraos explains, "or that inflation would fall and the Fed would cut rates because the economy fell into a recession."

Amid recent incoming data suggesting the economy is weakening, 30-day fed funds futures prices show expectations for as many as four and even five rate cuts this year.

The market sees a greater than 95% probability the Fed will hold next week. The FOMC will meet five more times in 2025 after the May meeting.

- David Dittman

Where are all the Fed speakers right now?

The Fed-speak is non-existent right now. That's by design. And, setting aside arguments about correlation vs causation, markets are behaving well in the silence.

Since Saturday, April 26, and until Thursday, May 8, participants in the FOMC meeting have been bound by a Federal Reserve policy that limits the extent they can talk about the economy and interest rates.

These two-week "blackout periods" begin the second Saturday preceding an FOMC meeting and end the Thursday following a meeting. An unofficial practice that began in the 1980s was formalized in 2011 and reaffirmed in January.

Fed-watchers see the policy as a measure against corruption and the potential for information leaks to distort markets. It also provides cover for open discussion during the Fed's most intense periods of policy-making.

During the current quiet period, the S&P 500 has rallied 2.0%, the Dow Jones Industrial Average 2.1% and the Nasdaq Composite 2.6%.

- David Dittman

April jobs report gives the Fed more wiggle room

The April jobs report came in stronger than expected, showing the U.S. labor market is slowing but still healthy. While this is good news for the Fed, which has repeatedly said it is in no rush to cut interest rates, the heightened uncertainty from President Trump's trade war has many pushing the central bank to act sooner rather than later.

According to the Bureau of Labor Statistics, nonfarm payrolls rose by 177,000 in April. This was lower than March's downwardly revised 185,000 figure but more than the 133,000 new jobs economists expected. February jobs growth was also lowered.

The unemployment rate, which is calculated from a separate survey, remained at 4.2%.

"Although markets had braced for a slowdown in job growth – due to factors like DOGE job cuts, increased immigration reform, and soft economic indicators – private sector hiring has remained resilient," said Kevin O'Neil, associate portfolio manager and senior research analyst for Brandywine Global.

O'Neil adds that while the stronger-than-expected employment data "gives the administration more breathing room in its trade negotiations," it also suggests that "the Federal Reserve is unlikely to shift its current policy stance in the near term."

Read more: Strong April Jobs Report Lowers Rate-Cut Hopes: What the Experts Are Saying

President Trump chimes in on rate cuts after the April jobs report

President Trump quickly took to Truth Social after this morning's release of the April jobs report, encouraging the Federal Reserve to cut interest rates as soon as possible.

In an early Friday post, he wrote:

"Gasoline just broke $1.98 a Gallon, lowest in years, groceries (and eggs!) down, energy down, mortgage rates down, employment strong, and much more good news, as Billions of Dollars pour in from Tariffs. Just like I said, and we're only in a TRANSITION STAGE, just getting started!!! Consumers have been waiting for years to see pricing come down. NO INFLATION, THE FED SHOULD LOWER ITS RATE!!! DJT"

- Karee Venema

What experts are saying about the jobs report and the Fed

Several of Wall Street's top minds are chiming in on what the April jobs report means for the Fed and interest rates. Here's a sampling of what they're saying:

"The jobs data for April are reassuring, but business and consumer surveys point to uncertainty ahead. They reflect a lot of concern about general economic conditions with higher tariffs," says Bill Adams, chief economist at Comerica Bank. "There are also some indicators that businesses are reining in plans for hiring and capital spending."

Adams adds that the hard data carries more weight in the Fed's decision-making than what they forecast might happen in the future, "and the job market was fine in April." As such, Adams expects the central bank to hold steady next week and will likely lower rates with less frequency going forward than many are anticipating.

"Like the U.S. economy, job growth is gradually weakening but remains strong enough to support consumer spending early in Q2 – as tariff-related price increases just begin to bite," says Jennifer Timmerman, investment strategy analyst at Wells Fargo Investment Institute (WFII). "Resilient labor-market conditions will likely keep the Fed on the sidelines until tariffs more clearly pressure economic growth."

"With the U.S. labor market conditions remaining intact, the Fed can remain a spectator on the sidelines with respect to policy changes as the fallout from Trump's higher tariff regime and shifting trading policy appears to be lagging," says Charlie Ripley, senior investment strategist for Allianz Investment Management. "Ultimately, this report is consistent with other labor metrics that conclude the U.S. economy is not experiencing a material shift in labor conditions."

- Karee Venema

Markets now expect a July rate cut

A strong April jobs report lowered the odds of a June rate cut and pushed expectations for one out to July.

According to CME FedWatch, futures traders are now pricing in a 34% chance the Federal Reserve will lower the federal funds rate by a quarter-percentage point in June, down from 55% one week ago and 61% one month ago.

The probability that the next rate cut will come in July rose to 56% from 44% on Thursday and 44% one month ago.

- Karee Venema

The S&P 500 is on a record-setting win streak ahead of Fed week

The S&P 500 gained 1.5% on Friday, May 2, to mark its ninth consecutive advance. This is the longest winning streak for the broad-market index since November 2024, according to Dow Jones Market Data.

And it's particularly notable given recent stock market volatility in reaction to tariff uncertainty. Indeed, the S&P 500 was down more than 15% for the year to date in mid-April. It has since pared this deficit to just 3.3%.

The rebound occurred "as progress on tariff talks helped calm investor fears," says Mark Hackett, chief market strategist at Nationwide, and was helped by steady retail buying and institutional investors coming off the sidelines.

"Investors' positive response to earnings suggests expectations were appropriately reset, but with emotions still elevated, volatility is likely to remain," Hackett adds.

Read more: Stock Market Today: S&P 500 Nabs Longest Win Streak Since 2004

Will the Bank of England cut rates on Thursday?

The upcoming week is a busy one for global central bankers. In addition to the U.S. Fed meeting, the Bank of England will issue its latest policy statement this Thursday, May 8.

Global central banks are easing monetary policy in the face of the Trump administration's trade war, says Jennifer Lee, senior economist at BMO Capital Markets.

"According to Bank of England Governor Andrew Bailey, there are a few things to consider: weak growth and what caused it (supply or demand), inflation, and now 'the trade issue is the new part of that story,'" she adds.

Lee notes that confidence is waning after the International Monetary Fund lowered its growth forecasts for the U.K., citing the impact of tariffs as one factor. Disappointing manufacturing and employment data do not help matters.

The economist says that the vote breakdown among the BoE's nine members will be interesting.

"The question is, how many will opt for a 50 basis point cut? That will determine how dovish the BoE is. But on May 8, it is widely expected that the Bank of England, after staying on hold in March, will trim its bank rate 25 bps to 4.25%," Lee concludes.

- Karee Venema

Fed officials have signaled support for a pause

U.S. central bankers appear to be "in no rush to adjust rates" at the May Fed meeting, writes Marc Giannoni, chief U.S. economist at Barclays.

Fed officials have made it clear that "they view the [current] policy stance as well-positioned to deal with the risks to the inflation and employment sides of their mandate," he adds.

Giannoni says that given the considerable economic and policy uncertainty Fed members are facing, they are "waiting for greater clarity on the evolution of the economy in coming months.

The economist expects both the FOMC statement and Fed Chair Powell "to acknowledge that some market- and survey-based measures of near-term inflation expectations have moved up, and that surveys of households and businesses indicate a decline in sentiment and elevated uncertainty about the outlook."

He also expects Powell to note "that tariffs are likely to cause higher inflation and lower growth."

However, Giannoni believes the Fed will keep rates unchanged this time around, but anticipates two quarter-point rate cuts by year's end.

- Karee Venema

Wall Street gets a heavy dose of earnings during Fed week

The Fed meeting won't be the only thing on Wall Street's radar this week. First-quarter earnings season is well underway, and the lineup of companies that will report over the next few days is long.

Among the most noteworthy names are chipmaker Advanced Micro Devices (AMD), which reports Tuesday evening, and media and entertainment giant Walt Disney (DIS), which unveils its results ahead of Wednesday's open.

Read more: Earnings Calendar and Analysis for This Week (May 5-9)

What Buffett had to say about tariffs

Berkshire Hathaway's (BRK.B) annual meeting, which was held over the weekend in Omaha, Nebraska, is the talk of Wall Street today.

While the biggest news to emerge from the "Woodstock of Capitalism" is the upcoming retirement of CEO Warren Buffett, the famed investor's take on tariffs is getting plenty of attention too.

Tariffs entered the conversation right off the bat, with Buffett saying that "trade can be an act of war" and that it has "led to bad things like the attitudes it's brought out in the United States."

Buffett added that we should encourage global trade, allowing the U.S. to "do what we do best," and for other countries to "do what they do best."

He concluded by saying that using trade as a weapon is not wise and is not right. "The more prosperous the rest of the world becomes, it won't be at our expense – the more prosperous we'll become and the safer we'll feel and your children will feel someday," Buffett offered.

- Karee Venema

What the 10-year Treasury yield is telling us

The U.S. Treasury market has calmed since early April, when President Trump's "Liberation Day" tariffs introduced unprecedented uncertainty for the global economy and financial market volatility spiked.

Treasury yields declined at first on expectations that the broader and deeper tariffs Trump announced would cause a recession.

Yields began to rise, though, as investors, traders, and speculators priced in the potential for higher inflation and weaker growth.

The yield on the 10-year Treasury note spiked from 3.991% on Friday, April 4, to as high as 4.592% intraday on Friday, April 11.

That unusually fast move caused some participants to question the functioning of what is the broadest, deepest, and most important securities market in the world.

The yield on the 10-year Treasury note was 4.35% as of midday on Monday, up from 4.32% on Friday and still trending higher in the aftermath of a stronger-than-expected April nonfarm payrolls report.

That's a normal, healthy reaction – investors, traders and speculators pricing in healthy incoming economic data in an orderly way.

We'll see what the FOMC and Fed Chair Jerome Powell have to say about the health of the labor market, the trajectory of the broader economy, and how both will be impacted by tariffs on Wednesday.

- David Dittman

June rate cut odds keep falling

With a little less than 48 hours to go until the end of the May Fed meeting, the release of an updated monetary policy statement, and Fed Chair Jerome Powell's press conference, 30-day federal funds rate futures prices show a 97.3% probability the FOMC holds things steady at 4.25% to 4.50% on Wednesday.

There's not much in doubt, save for some edits to the statement, maybe some fresh nuance on employment, perhaps some inflation color.

Powell will be pressed to comment on President Trump's tariffs beyond what he's already said – that "the level of the tariff increases announced so far is significantly larger than anticipated" and that uncertainty could lead to a "challenging scenario" for the central bank with regard to its dual mandate of maintaining price stability and achieving maximum employment.

He's not likely to move much off his existing words; that's just not his style.

The Fed chair is also somewhat more secure in his position, if only from the perspective of incoming data, following a stronger-than-expected April nonfarm payrolls report that has Treasury Secretary Scott Bessent writing "the engine is already starting" and "this is just the cylinder firing" in the op-ed section of Sunday's edition of The Wall Street Journal.

Notable is the absence of any reference to the Fed or Powell in Bessent's essay, no repetition of his late call for an interest rate cut. The Treasury secretary only recently joined the president's chorus on that score, citing Treasury market price action that suggests a rate cut is warranted.

It's not happening this week, though. And the probability of a 25 basis point move lower at the June 17-18 Fed meeting has fallen to 29.4% from 60.5% one week ago.

- David Dittman

What time is the Fed meeting?

The May Fed meeting begins today, May 6, with central bank officials gathering to discuss economic policy.

It will conclude on Wednesday, May 7, with the FOMC releasing its latest policy statement at 2 pm Eastern Standard Time.

Fed Chair Jerome Powell will begin his press conference at 2:30 pm EST on Wednesday, May 7.

- Karee Venema

Can Powell send bitcoin to $150,000?

The July Fed meeting is currently the odds-on favorite for the central bank to resume lowering interest rates.

"As expectations firm around a mid-year pivot, capital is already rotating into assets that historically benefit from looser financial conditions," says Matt Mena, crypto research strategist at 21Shares.

And bitcoin, he says, has been a major beneficiary of this shift. "Nearly $2 billion flowed into U.S.-listed bitcoin ETFs last week alone, lifting year-to-date inflows to over $4 billion," Mena notes, pointing out that this was more than any of the sector ETFs.

This underscores a shifting trend in portfolio construction, the strategist adds. "With the prospect of declining real yields, investors are increasingly viewing bitcoin not just as a hedge, but as a high-conviction core asset in a lower-rate regime."

As for the cryptocurrency and the central bank, Mena reminds us that Fed Chair Powell has previously made "measured, positive remarks about bitcoin in recent months."

To wit, Powell said in his presser following the January Fed meeting that the central bank's "role with crypto really is to look at the banks and we think banks are perfectly able to serve crypto customers as long as they understand and can manage the risks and it's safe and sound."

Mena believes that if Powell mentions crypto again in tomorrow's press conference, bitcoin could climb back above $95,000 and make a run toward the psychologically significant $100,000 level.

"From there, all eyes would turn to breaking the $108,500 all-time high and potentially finishing the year around $150,000 if rate cuts accelerate and momentum continues building," he says.

At last check, bitcoin was hovering around $94,000.

- Karee Venema

Powell and his purple ties

While the odds of a May rate cut are low, it's a safe bet that Fed Chair Powell will be wearing a purple tie during tomorrow's press conference.

That's because Powell always wears a purple tie … and there's a reason for it.

During an early April Q&A session with journalists at the Society for Advancing Business Editing and Writing conference, Powell was asked about the meaning of his purple ties.

"At the beginning, the only significance was that I like purple ties," Powell replied. At his next press conference, he said, he went to reach for a red or blue tie and thought, "Maybe not … so I wind up wearing purple."

He said now it's become "a thing," and it supports the fact that the Fed "is strictly non-political" and "bipartisan," and purple is a good color for that.

"Plus, I like purple ties," Powell concluded.

- Karee Venema

When is the next Fed meeting?

After the May FOMC gathering concludes tomorrow afternoon, the next Fed meeting will occur on June 17-18. And the meeting after that will fall on July 29-30.

"FOMC meetings last two days and conclude with the committee releasing its policy decision at 2 pm Eastern time. The Fed chief then holds a press conference at 2:30 pm," explains Kiplinger contributor Dan Burrows.

"[T]he committee meets eight times a year, or about once every six weeks," Burrows notes. "The FOMC is required to meet at least four times a year and may convene additional meetings if necessary."

Read more: When Is the Next Fed Meeting?

Stocks log back-to-back losses ahead of Fed announcement

Stocks closed lower for a second consecutive session Tuesday as investors await substantive terms from the Trump administration amid ongoing talks with its global trading partners.

President Donald Trump welcomed Canadian Prime Minister Mark Carney to the White House on Tuesday afternoon, but little progress came from their discussion.

As for the Fed, all eyes are on tomorrow's policy statement and Chair Powell's subsequent presser. Thirty-day fed funds futures prices reflect a 96.8% probability the Fed will hold interest rates at 4.25% to 4.50%, down from 98.6% on Monday.

Read more: Stock Market Today: Stocks Slip for a Second Straight Day

Stock futures point higher on Fed Day

Stock futures are signaling a positive start on Fed Day. At last check, the Dow Jones Industrial Average is up 0.4% thanks to strong earnings from entertainment and media giant Walt Disney (DIS).

Meanwhile, the S&P 500 is 0.3% higher and the Nasdaq Composite is flirting with a 0.2% lead.

- Karee Venema

Why Powell & Co. can remain data-dependent

Scott Helfstein, head of investment strategy at Global X, says Fed Chair Powell will likely be careful with his words during today's press conference.

Stocks sold off sharply after Powell spoke in Chicago a few weeks ago, with the Fed chair saying markets are doing what they're supposed to do," and that the Fed will not intervene if the stock market plummets.

Powell also said that while the economy is "moving away" from the central bank's dual mandates for price stability and full employment, the Fed is "well-positioned to wait for greater clarity" before making changes to current monetary policy. In other words, it's in no hurry to cut interest rates prematurely.

Helfstein agrees that there "isn't a good reason to change rates at this point, and the Fed is likely to reiterate the need for more data with three rate cuts priced in for 2025, at this point starting in the summer."

He cites strong corporate earnings, a resilient U.S. economy and stable price growth as reasons the central bank can maintain its data-dependent approach.

- Karee Venema

What time is Jerome Powell speaking today?

The May Fed meeting will conclude today, May 7, with the FOMC releasing its latest policy statement at 2:00 pm Eastern Standard Time.

This will be followed by Fed Chair Powell's press conference, which will begin at 2:30 pm EST and run for roughly an hour or so.

You can watch Powell's presser on the Federal Reserve website or on its YouTube channel.

What the experts are saying about Fed rate cuts

"The Federal Reserve is unlikely to lower rates this week or to act decisively until after July 8, when the 90-day tariff pause ends.

"The resilient labor market, as evidenced by Friday's job report, gives them further room to delay action. We still expect one to two cuts before year-end, with the first cut most likely in late summer or fall." - Emily Bowersock Hill, CEO and founding partner at Bowersock Capital Partners

"Powell has emphasized the risks tariffs pose to the Fed's dual mandate, warning they could fuel both inflation and unemployment.

"With inflation expectations stable – the five-year breakeven fell to 2.4% – and recent economic data strong, the Fed has room to stay patient and cautious on rate cuts. That stance is critical in a market still sensitive to policy signals." – Mark Hackett, chief market strategist at Nationwide

"While markets have been volatile since the Fed's last meeting in mid-March, the central bank is not expected to react to the recent turbulence by easing policy rates.

"Given the potential inflationary impact of widespread tariffs, it's likely that we'll get some additional comments from Powell discussing whether the Fed is viewing the tariffs as a transitory factor or, potentially, a driver of more persistent long-term price pressures.

"If we see signs of the former, it would likely be seen as supportive for markets, while the latter would likely represent a headwind." – Sam Millette, director of fixed income at Commonwealth Financial Network

"The Fed is in a bit of a pickle. If it is confronted with both an economic slowdown and rising inflation at the same time, which should it choose to address?

"It would normally cut rates to deal with a slowdown, and raise rates to counter higher inflation. The Fed's preference is likely to stand pat until it sees an economic slowdown." – David Payne, staff economist at The Kiplinger Letter

"The Fed is most assuredly expected to keep rates unchanged at Wednesday's meeting as recent data does not support lowering interest rates. We expect only one rate cut this year with a small possibility of zero cuts.

"Rate cuts are not justified as inflation remains sticky and above the Fed's stated 2% inflation target. Furthermore, there are serious concerns that the tariff situation will introduce inflationary pressures that will begin to reveal themselves as time progresses.

"In keeping with the Fed's stated dual-mandate, they face the daunting task of balancing price stability and maximum employment during a period of unprecedented uncertainty and stress upon the economy." – Chris Brigati, chief investment officer at SWBC

Stocks trade mixed ahead of Fed decision

The main stock market indexes are mixed ahead of this afternoon's 2 pm EST Fed decision.

At last check, the Dow Jones Industrial Average is up 0.6% and the S&P 500 is 0.2% higher. The Nasdaq Composite, though, is down 0.3%.

Top gainers at midday Tuesday are Walt Disney (DIS, +10%) and Charles River Laboratories (CRL, +16%).

Marvell Technology (MRVL, -11%) and Alphabet (GOOGL, -8%) are among the biggest decliners.

The Fed announcement is in

The Federal Open Market Committee just released its latest policy announcement. As expected, the central bank held its federal fund rate steady at a range of 4.25% to 4.5%.

The central bank cited "solid" economic activity for not lowering rates this time around, and emphasized that it will take action later if conditions warrant it.

- David Payne

Here's what changed in the FOMC statement

Changes to the FOMC's latest policy statement include the following:

Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. (Previously read: Recent indicators suggest that economic activity has continued to expand at a solid pace.)

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen. (Previously read: The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty around the economic outlook has increased. The Committee is attentive to the risks to both sides of its dual mandate.)

The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. (Previously read: The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion.)

- Karee Venema

Dow gains fade, S&P 500 swings lower after FOMC statement

The S&P 500 swung lower after the Fed released its May policy statement, last seen down 0.4%. The Dow Jones Industrial Average has pared its earlier gains, now up a modest 0.1%.

Over in the bond market, the yield on the 2-year Treasury bond is down 2.5 basis points at 3.764%, and the yield on the 10-year Treasury bond is off 5.3 basis points at 4.265%. (A basis point = 0.01%.)

Tariffs are impacting inflation expectations

At the start of his press conference, Fed Chair Powell said tariffs are to blame for higher inflation expectations in recent consumer sentiment surveys.

If large tariffs are sustained, then the economy will likely slow, though the impact on inflation could be limited.

- David Payne

Powell reiterates the Fed's ability to stay patient

"The economy appears to be growing at a solid pace," and the labor market appears to be in a good place, Powell said, allowing the Fed to stand pat on any interest rate cuts for the time being.

He acknowledged the drag on GDP growth in the first quarter from a flood of imports being rushed in ahead of imminent tariffs, but said that if you take out that "distortion," the economy still appears to be reasonably healthy.

"We don't have to be in a hurry" to make any changes to monetary policy, either to give the economy a boost by cutting rates, or fighting inflation by raising rates, if tariffs fuel future inflation," Powell said.

- David Payne

Risks to the Fed's dual mandate are rising, Powell says

Asked if he "still sees a path for a soft landing" at a time when many economists have raised their odds of a recession hitting, Powell noted that the risks of higher unemployment and higher inflation have risen.

He allowed that the Fed might take a while to make more progress on its twin goals of lowering inflation and ensuring full employment.

And he acknowledged that it could be harder for the Fed to act preemptively to combat inflation caused by tariffs by raising interest rates than in prior economic cycles when the Fed tried to get ahead of slowdowns in economic growth.

- David Payne

Should the Fed cut rates at all this year?

Asked if the Fed should be cutting rates "at all this year" when inflation just ticked down, Powell demurred, saying "We just don't know" how the administration's tariffs will settle out.

Conversely, when asked if President Trump calling on the Fed to cut rates to help the economy makes his job harder, Powell said, "It doesn't affect either our job or the way we do it."

The Fed will stick strictly to what the incoming economic data show.

- David Payne

What is QE?

"Quantitative easing is the deliberate expansion of the central bank's balance sheet. The Fed purchases assets such as government bonds and mortgage-backed securities (MBS) in the open market," writes Kiplinger contributor Will Ashworth.

"The move, which increases the money supply, is intended to lower longer-term interest rates, stimulating lending and economic activity," he adds."

Read more: What Is Quantitative Easing and Why Does the Fed Use It?

Powell reiterates confidence in the U.S. economy

Powell admitted that there is a lot of "soft" data that indicates the economy may soon slow down. But any slowdown isn't showing up in the "hard" data yet, such as the employment report for April.

He noted that "consumers keep spending," and that the labor market is holding up.

Clearly, Powell wants to project that while he's alert to risks to the economy related to tariffs, especially the uncertainty over what the administration's trade policies really are, he is not overly concerned about where things stand now.

The question is whether financial markets will feel heartened by his qualified confidence.

- David Payne

What needs to happen for the Fed to cut interest rates?

It sounds like only a significant increase in unemployment would prompt the Fed to cut rates.

Powell emphasized that job creation is still good, the jobless rate is low, and there are no signs of major layoffs.

When pressed to identify what would spur the Fed to lower rates, he again emphasized all of those positive signs about the labor market.

The takeaway for investors: The Fed will not be ready for a rate cut unless and until the labor market data really deteriorate.

- David Payne

Powell does not comment on tax cuts

"We do know that the (national) debt is on an unsustainable path," said Powell, but he refused to answer a question about the fiscal soundness of legislation taking shape in Congress that would extend tax cuts while also possibly cutting spending.

Powell was adamant that it's not the Fed's job to give advice to Congress on the fiscal policy of taxing and spending, and then added "just as it's not their job to give us advice on monetary policy," drawing chuckles from the press.

The message: Powell will not be commenting on any political matters, whether it's President Trump's trade policies or what lawmakers do on Capitol Hill.

- Jim Patterson

May Fed meeting: What the experts are saying

With the May Fed meeting now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the outcome and what it could mean for investors going forward.

The FOMC statement "showed no shift in the Fed's current cautious approach to policy decisions and underlined the uncertainty in economic data that will likely see them hold rates through the first half of this year.

"However, the Fed's cautious approach will likely become difficult over the next few months as volatile data clouds the economic outlook and pressure to resume cuts increases from the market and the Trump administration." – Ryan Weldon, investment director and portfolio manager at IFM Investors

"Whether you like it or not, the mantra for Chair Powell's Fed has always been to make sound policy decisions established from the certainty of economic statistics, or in other words, remaining heavily data dependent.

"The committee toned down the concern over the negative GDP figure in Q1 given the impact from net exports, which tells us that despite volatile markets, the current state of the U.S. economy shows expanded activity at a solid pace." – Charlie Ripley, senior investment strategist for Allianz Investment Management

"Today's FOMC meeting is likely to leave investors 'waiting and seeing' alongside the Fed. This dynamic is not new for the Powell Fed, which waited longer but moved more forcefully once the decision to adjust rates came in both 2022 and 2024.

"A less anticipatory Fed is more likely to compound uncertainty and volatility in the coming months. As a result, we believe quality and dividend growth are investment styles that are likely to remain in favor in the coming months." – Josh Jamner, investment strategy analyst at ClearBridge Investments

"We still believe that a stagflation call is completely out of touch with what stagflation is. Thus, while we also recognize the risks to higher unemployment and higher inflation, this risk has not yet risen to a point where we would consider stagflation a certainty." – Eugenio Alemán, chief economist, and Giampiero Fuentes, economist at Raymond James

- Karee Venema