Market Update: Dow Jones (DJIA), S&P 500 React to Fed Rate Decision

• The Federal Reserve kept interest rates steady but hinted at possible rate cuts later in the year.
• The Fed also expects slower economic growth and higher inflation.
• US stock indexes, including the Dow Jones and S&P 500, rose following the Fed's announcement.
• Technical analysis suggests the Dow Jones faces immediate support at 42000 and potential resistance at 42446 and 42764.

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Wall Street Indexes continued their advance after the Federal Reserve kept rates unchanged. The central bank decided to keep interest rates steady at 4.25%-4.50% but suggested two small rate cuts might happen later this year, staying consistent with earlier predictions. The Fed also expects slower economic growth and higher inflation ahead.

Policymakers were divided on what to do next, showing uncertainty about how to address the impact of the Trump administration's policies.

The Fed also announced it would slow down the reduction of its large balance sheet. This comes as the central bank faces difficulties evaluating market conditions during a standoff in Congress over raising the government’s borrowing limit.

Summary of Fed Chair Powell's Comments

1. Economy is strong, inflation remains "somewhat elevated"
2. Tariffs have driven inflation expectations higher
3. Fed is not "in a hurry" and will await further clarity
4. If the labor market weakens, Fed can ease if needed
5. If economy remains strong, policy restraint can be maintained
6. Made technical decision to slow balance sheet decline

The Fed remains in "wait and see" mode.

US Indexes had risen prior to the FOMC meeting with the meeting injecting some fresh liquidity and pushing all major indexes higher. The S&P 500 is trading up around 1.70% with the Dow Jones up around 1.47%.

From a sector perspective, Industrials were the big winners with gains of around 4.05% followed by Financials and Tech, with gains of 2.74% and 2.34% respectively.

Individual stocks on the move include Boeing with gains of around 7% followed closely by NVIDIA and American Express with gains of 3.2% and 3.3% respectively.

From a technical standpoint, the Dow Jones has moved above a key area of resistance around the 42000 handle.

The question will be whether the daily candle will close above this handle which would hint at further upside. The Dow has had a slight pullback from the post FOMC highs and is currently flirting with support at the 42000.

The 14 period RSI is approaching the neutral 50 level with a break above further supporting the idea of a deeper recovery. A rejection of the 50 level may be seen as a sign that momentum still remains with the bears and could lead to a retest of recent lows.

Immediate support rests at 42000 before the 41400 and 41100 handles come into focus.

If the bullish momentum continues, immediate resistance rests at 42446 and 42764.

Dow Jones (US30) Daily Chart, March 19, 2025

Support

• 42000
• 41400
• 41100

Resistance

• 42446
• 42764
• 43402

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