The Federal Reserve threw something on Wall Street that it expected – but also mixed in a curve – after the conclusion of the latest Federal Open Market Committee (FOMC) meeting on Wednesday.

The Fed, as expected, said it was not quite ready to announce the start of tapering, but made it clear that action was on the horizon.

“If progress [on maximum employment and price stability goals]Continuing broadly as expected, the Committee believes that a moderation in the pace of asset purchases may soon be warranted, “the central bank said in a statement. Many strategists believe the Fed will enter in November or December.

More surprisingly, the Fed’s latest “plot of points” – a graph showing the expectations of FOMC participants for future interest rate developments – now forecasts a 0.5 percentage point hike in the federal funds rate by the end of 2022.

“The absence of a formal cut announcement is clearly accommodating, compared to a somewhat surprising hawkish dot chart, which now increases the odds of a rate hike in 2022,” said Cliff Hodge, chief investment officer. at Cornerstone Wealth. “This accelerated schedule is well ahead of consensus expectations that the first hike does not occur until 2023.”

Michael Gregory, Deputy Chief Economist at BMO Capital Markets, provides additional details on the dot chart:

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“The median projection now includes a 0.5 point rate hike for this year from none before (2 out of 11 in the June immobility camp jumped on the bandwagon with just one hike),” a- he declared. “And, it now has a 75 basis point tightening in 2023 instead of 50 basis points previously, with only one resistance without a rate hike. The inaugural points for 2024 show an additional 75 basis point tightening to reach a 1.75% end point, with, as expected, no one left on the no-change camp. “

The Dow Jones Industrial Average (+ 1.0% to 34,258), which was already enjoying a strong rally, withstood some volatility after the release but held onto gains. The S&P 500 (+ 1.0% at 4,395) and Nasdaq composite (+ 1.0% to 14,896) followed suit.

Other stock market news today:

• Small cap Russel 2000 jumped 1.5% to 2,218.
• FedEx (FDX, -9.1%) suffered a steep decline following a disappointing earnings report that included a cut to its guidance for 2022. While the transport company topped revenue estimates with one figure With sales of $ 22 billion in the first quarter of fiscal 2022, its earnings of $ 4.37 per share were well below analysts’ expectations at $ 4.88 per share. This led FedEx to lower its full-year profit forecast to $ 20.38 per share from $ 21.00 previously – even further than the consensus estimate of $ 21.13. Of particular note are the significantly lower EBIT (earnings before interest and tax) margins in the August quarter, at 8.2% versus 6.7% last year. “This should be temporary, however, as the severe labor shortages that are forcing FDX to reroute shipments around understaffed hubs will diminish as the pandemic abates, in our view, reducing costs. ‘shipping and overtime, “said CFRA analyst Colin Scarola, who dropped his 12-month price target to $ 335 per share from $ 357 but maintained a strong buy rating on the shares
• Facebook (FB) fell 4.0% today after the social media giant said it underestimated Apple’s iOS Web Conversions (AAPL) by around 15%. According to Facebook’s vice president of product market, Graham Mudd, this is because recent “platform changes” – namely AAPL updating its iOS earlier this year to allow users to turn off the tracking – made it more difficult to measure the performance of advertising campaigns. “We are optimistic about our multi-year efforts to develop new privacy-enhancing technologies that minimize the amount of personal information we process, while allowing us to serve personalized ads and measure their effectiveness,” he said. written in a press release. Blog, while adding that these efforts “will take time”.
• Seventh consecutive weekly decline in domestic crude supplies sent U.S. Crude Oil Futures up 2.5% to $ 72.23 a barrel.
• Gold Futures gained marginal to $ 1,778.80 per ounce.
• The CBOE Volatility Index (VIX) dipped 13.9% to 20.97.
• Bitcoin rebounded 3.4% to $ 43,428.16. (Bitcoin trades 24 hours a day; the prices listed here are at 4 p.m. each trading day.)

Did investors dodge a bullet?

Monday’s fears that China’s Evergrande could turn into yet another Lehman Brothers-style collapse have – if the move in stocks since then is any indication – have all but subsided, at least for now.

This does not necessarily mean that investors are clear.

Brad McMillan, chief investment officer for Commonwealth Financial Network, noted earlier this week that “the Evergrande news is likely the trigger, but not the cause, of the small setback we’ve seen.” Indeed, the market has gone months without a significant decline, and risks remain including high stock prices, concerns over COVID and an impending debt ceiling.

So do not be afraid, but stay on your guard.

Those looking for protection might consider the solid blue chip chips from the Dow Jones Industrial Average, or low volatility strategies that prioritize defense.

A little pruning could also be in order. A general market downturn does not punish all stocks the same – particularly expensive stocks often pay the price of the sale. We recently assessed 10 stocks that could be on a precarious pole – while there are no glaring flaws in their underlying companies, a combination of poor growth prospects and sky-high valuations make them particularly vulnerable to a downturn. sudden fall.