On Wednesday, the Federal Reserve announced benchmark interest rates would remain unchanged. At least in the short term.
The agency also left the door open for deeper rate cuts throughout the year.
Many analysts had hoped for a reduction in interest rates ahead of the statement.
But even with these concerns, the major indexes rallied this week.
The Dow Jones Industrial Average popped 249 points. That surge contributed to a daily high of 26,753.
And the S&P 500 Index jumped 27 points on Thursday. It hit a peak of 2,958 points the same day. That’s one of the highest intraday surges for the index this year!
All this good news comes with a caveat.
Market watchers across the globe still hold a weak economic outlook. Lingering trade-war tensions have dented analysts’ expectations for robust economic growth this year.
The Fed’s split decision also suggests an uncertain economic outlook. Fed Chair Jerome Powell set a target range of 2.25% to 2.5%.
Of the 17 Fed officials responsible for setting monetary policy, seven believe short-term rates should drop by 0.5% to keep inflation low and spur faster growth.
Whether rates rise or fall, our own experts see signs of relief in the markets.
Chad Shoop, editor of Quick Hit Profits, suggests the Fed won’t lower rates again unless we see one scenario play out in 2019:
I believe the Fed’s announcement will spark more volatility this year. Just don’t expect it to shift the markets in either direction.
Lower interest rates would boost the economy. They could lead to bigger gains in the stock market as well. But I just don’t see the Fed lowering rates in 2019.
Doing so would be an admission that it raised interest rates too high last year. I don’t think Fed officials believe this is the case.
Look for the Fed to focus on accommodative language. It wants to keep the markets at ease. I don’t see a full-blown rate cut until there’s further weakness in the economy.
Chad tells us he maintains a positive outlook on the economy.
During the market’s volatile moves in June, he’s managed to net his readers two 50% gains in less than three weeks.
Chad has a “profit trigger” that he uses to find lucrative trades … in any market! You can find out more about it right here.
Senior analyst John Ross also offered his two major takeaways from the Fed’s statement:
Two things from the Fed caught my attention.
First, Fed Chair Jerome Powell emphasized a commitment to “sustain the economic expansion.” That gives investors some confidence.
It also sets the market up for another breakout. The 2016 breakout sparked a 38% rally over the next 18 months.
Second, the Fed changed its classification of U.S. economic growth from “solid” to “moderate.” Moderate growth occurs in the late stage of an economic cycle.
Basic materials stocks perform well in the late stage of the cycle. I’m watching for a rotation. I expect the current leaders — tech and financial stocks — to take a backseat to materials and energy.
John Ross tracks the current market cycle in his Winning Investor Daily articles. He also offered his perspective on the U.S. economy’s growth cycle in a recent YouTube video.
Many experts believe the economy is experiencing a phase of rapid expansion, which typically happens before a market contraction.
As John mentioned above, he thinks the materials sector will trend higher over the current market cycle. And he wants to let you know how to trade this sector for gains.
You can learn more about his strategy at the link below.
He’s also been working behind the scenes with Matt Badiali on a trading service that you won’t want to miss! We’ll tell you more about it in the coming weeks.
We’d like to thank all of you who responded to our question about Tesla last week.
We learned that the majority of you are still bullish on the stock, while the rest have your doubts. Don from Texas shared one analyst’s take that Tesla’s stock is “going to $100 a share.”
We’ll see what the future holds for this electric vehicle leader!
Our other gurus have more content to share with you this week.
Check out Our Latest YouTube Videos!
This week, Anthony Planas posted the latest episode of his Marijuana Markets: A POTcast. He discusses Hexo Corp.’s plans to introduce cannabis-infused drinks to North America, the Queen of England’s fear of missing out on pot stocks and more!
Just click the image below to watch his latest video.
You can also check out all of his podcasts right here.
Charles Mizrahi updated his YouTube channel this week. He tells the story of how one blue-collar investor made his millions. And he did it all while working as a gas station attendant!
Charles explains the three most important tips he learned from this investor’s incredible story.
And we always love to hear from you! How do you think the markets will fare after the Fed’s announcement?
Just write to us at winninginvestor@banyanhill.com to be part of the conversation.
Our experts keep a close eye on the markets. They want to make sure they can offer the best trading advice.
Read on to see the topics they’re following this week.
Regards,
The Winning Investor Daily Team
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The Oil Service Sector Is Set for a Huge Rebound
https://banyanhill.com/oil-service-sector-set-for-a-huge-rebound-stock-market/
Even with the recent run-up in oil prices, big service companies are at their lowest prices since 2003. There was massive underinvestment in the industry in recent years. Matt Badiali explains how that creates the opportunity for a huge windfall — if investors know where to look. (4-minute read)
Gold Prices to Drop Before an August Surge
https://banyanhill.com/before-you-buy-gold-prices-to-dip-before-august-surge/
The first five days of June saw gold prices increase by 5%. To many investors, this could signal a buying cue. But Chad Shoop knows better, and he explains why you should hold on a bit longer before buying the precious metal. (3-minute read)
Steel Industry Prices Will Surge With Inflation — Buy SLX ETF to Profit
https://banyanhill.com/steel-industry-prices-will-surge-with-inflation-buy-slx-etf-to-profit/
The steel industry hasn’t received much attention from investors. But that should change in the coming months. John Ross talks about how inflation and reflexivity will push iron ore’s and steel’s prices higher. (3-minute read)
3 Steps to Becoming a Blue-Collar Millionaire
https://banyanhill.com/3-steps-to-becoming-a-blue-collar-millionaire/
People think that being successful in the stock market is about having a high IQ and going all in while following big trends. But Charles Mizrahi disagrees, and he shares with you three simple steps that you can follow to strengthen your investing and enhance your profits. (4-minute video)
Why You Should Bet on Canadian Pot Companies
https://banyanhill.com/why-you-should-bet-on-canadian-pot-companies/
The cannabis industry is growing fast — and Canada is ahead of the game. Anthony Planas talks about this booming market and how you can take advantage of its rapid growth. (3-minute read)