Demand Imbalance Arbitrage

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Forecast Future Price Action

Stocks React to Fed Comments as Rates Remain on the Rise


Stocks rose modestly on Monday as traders weighed comments from Federal Reserve officials on the path for interest rates.[0] The Dow Jones Industrial Average gained 0.1%, the S&P 500 rose 0.1%, and the Nasdaq Composite reversed down 0.1%.[1] Tesla (TSLA) fell 2%, and Dexcom (DXCM) dropped 7.9%.[2]

The yield on the 10-year Treasury note declined by 4 basis points to 3.94%, while the yield on the 2-year Treasury note dropped by 2 basis points to 4.87%.[3] Shares of Ciena (CIEN) rose 6% following the announcement of its fiscal-Q1 results, which were better than[2] Apple (AAPL) gained nearly 2% on Monday as Goldman Sachs initiated coverage with a buy rating.[4]

The Fed is set to begin two days of congressional testimony Tuesday, where Chair Jerome Powell will have the chance to explain the central bank’s planned response to a more resilient economy.[5] Last month, the Fed raised rates by a quarter-percentage-point, and investors will be looking for clues as to the amount of the hike at this month’s March 21-22 meeting.[5] As per the CME’s FedWatch Tool, traders are currently offering odds of 69% that the next meeting will result in a quarter-percentage-point rate hike.[6]

On Thursday, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, expressed his preference for “steady” quarter-point rate increases to reduce potential risks to the economy, noting that the effects of the rate hikes may not be felt until the spring.[7] He added that the Fed might be able to pause rate increases by mid- or late-summer.[7] He cautioned that if inflation figures were higher than expected, it could influence Fed policy.[7] Also, Fed Governor Christopher Waller said a string of “hot” data might force the U.S. central bank “to raise interest rates even more.”[7]

Raphael Bostic, President of the Atlanta Federal Reserve, suggested that interest rates should be increased beyond 5%.[3] As part of an online essay, he added that the key rate would have to be held there until “well into 2024.”[3]

Overall, stocks appear to be taking policymaker comments into account, with the Dow Jones Industrial Average bouncing 1.75% in last week’s stock market trading and the S&P 500 and Nasdaq both rising 1.9% and 2.

0. “U.S. Stocks Give Up Much of Early Gains” The Wall Street Journal, 6 Mar. 2023,

1. “Dow Jones Rises As Treasury Yields Extend Losses; Tesla Stock Falls On Price Cuts” Investor’s Business Daily, 6 Mar. 2023,

2. “Stocks Rise On Strength In Apple And Lower Bond Yields” Barchart, 6 Mar. 2023,

3. “S&P 500, Dow, Nasdaq slump again on ongoing Fed concerns” Seeking Alpha, 1 Mar. 2023,

4. “Stock market news today: Stocks pare gains, finish mixed to start busy week” AOL, 6 Mar. 2023,

5. “Futures: Will Powell Testimony Threaten Stock Market Rally?” Investor’s Business Daily, 7 Mar. 2023,

6. “Dow Jones Fades Ahead Of Powell Testimony; Ferrari Overtakes Tesla As Leader; Apple Pops” Investor’s Business Daily, 6 Mar. 2023,

7. “Stock Index Futures Move Higher As Dovish Fed Comments Boost Hopes Of Fed Pivot” Barchart, 3 Mar. 2023,

Forecast Future Price Action
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