The increasing pace of the stock market slump continued last week. Nasdaq (QQQ) fell by 3.22%, S&P 500 (SPY) lost 3.07%, and Russell 2000 (IWM) dropped by 4.05%. The poor weekly performance increases the stock market’s call for the Fed to cut interest rates in June.
The Federal Reserve will meet on March 18-19, 2025. Ahead of the meeting, the U.S. dollar is weaker while Treasury bond prices are rising. Markets expect the Fed to cite the strong job market as a reason to hold benchmark overnight interest rates at 4.25% to 4.50%.
The Fed continues to target a 2.0% inflation rate. As inflation falls, investors already invested heavily in the strongest brands. This included Coca-Cola (KO), Mondelez (MDLZ), and Pepsi (PEP). Procter & Gamble (PG), which sells household goods, trades near its high for the year.
In the tobacco market, Altria (MO) and Philip Morris (PM) shares are on an uptrend.
The strong performance in consumer goods stocks suggests that the economy is healthy. Consumers continue to spend as inflation rates fall. That would give the Fed room to target an interest rate cut in June.
Your Takeaway
A rate cut before June is possible, too. Punitive tariff policies at 25% would slow the economy. The Fed might consider easing rates to prevent the economy from falling into a recession.
