Fed Leaves Rates Unchanged, Market Awaits News On U.S-China Trade

Stocks closed mostly lower yesterday after trading on both sides of the market.

Shares were under pressure for much of the day, but then turned positive after the Fed left rates unchanged and indicated that they were likely to leave rates alone for the rest of the year. But those gains were short lived as stocks fell back by the close.

The Fed also said they would slow their quantitative tightening in May and end it in September.

All bullish for stocks.

But Fed Chair, Jerome Powell, lamented the low inflation, citing weak global price pressures as "one of the major challenges of our time." Although, the 1.8% inflation reading for 2019 is not too far off of their stated 2% target. And their forecast for 2% for the next two years seems right on target.

They also lowered their economic growth rate for the U.S. from 2.3% to 2.1%. Powell's caution seems to stem largely from abroad, stating that he thinks the U.S. economy is in a "good place." But he acknowledged that trade disputes, slower growth in China and the EU, and concerns over Brexit are risks to watch. But because the U.S. is in such a good place, he believes this affords the U.S. patience to see how those things "evolve around the world and at home."

So why did stocks go down?

I chalk it up to simple profit taking after a spectacular 3-month rally that saw stocks soar (S&P up more than 21%) from their December lows to their YTD highs. Add in the longer than expected trade negotiations with China, and it was as fine a time as any to bank some profits before the next leg up.

But clearly, savvy traders have not been sitting idly by waiting for an official trade deal announcement (if and when it comes). They swooped in late last year and this year, picking up fantastic bargains at prices not seen in many, many months, or even years! And they now have the gains to show for it. All while too many other traders and investors were bailing out of stocks, just in time to miss the historic run-up that followed.

But you don't need to be a pro to profit like one. Making money in the market is easier than you think. Although, it doesn't hurt to learn the secrets of the pros, and to start incorporating them into you're your own trading. To learn a few of the secrets of the pros, be sure you read our latest commentary...

6 Lessons Learned as a Professional Trader

Best,

Kevin Matras

Executive Vice President, Zacks Investment Research

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