What impact could oil prices have on the upcoming Fed meeting?
public.com presents the rundown your daily market update in under 10 minutes my name is Zaid Admani and today is Wednesday March 18th in today's episode we'll preview today's fed meeting and why oil prices could impact their decision on interest rates We'll also tell you the latest on NVIDIA's attempt to restart sales in China.
Then stick around to the end of the show to find out why you might be getting your Amazon packages in under an hour. We got a great show for you today. Let's go. Well, stocks just had their first back-to-back day of gains since the start of the war with Iran on February 28th. Yesterday, the S&P 500 was up a quarter percent while the NASDAQ was up nearly half a percent.
You know, the fact that it took almost three weeks to string together two positive days in a row tells you how shaky the market has been lately. I guess investors are now a little bit less concerned about the situation in the Middle East. Now look, the Strait of Hormuz is still closed.
There are barely any ships passing through there, and Iran is ramping up attacks on oil infrastructure of other Gulf countries. So things are still escalating, but the market doesn't seem to be panicked about it anymore. What's crazy is I've actually seen some projections that oil could hit $200 a barrel if the Strait of Hormuz stays closed for an extended period of time.
So I don't think we're out of the woods just yet. And that brings us to the big event today, which is the Fed meeting. The market is pricing at a 99% chance the Fed holds interest rates steady at 3.5 to 3.75%. But the real focus from today's Fed meeting will be the dot plot.
The Fed releases a dot plot once a quarter and it shows where each member of the Fed projects interest rates to be for the next few years. And the economic picture has kind of changed over the last three weeks because of the war with Iran and rising oil prices. Remember, the Fed's job is to keep inflation low and employment high.
And right now, inflation is still above the Fed's 2% target and could start going back up again because of rising oil prices. And while all of that is happening, the labor market seems to be slowing down. The latest jobs report showed that 92,000 jobs were lost in the U.S. economy for the month of February. So all of that is changing the picture of when the Fed could cut interest rates.
You know, about a month ago, the market was expecting a rate cut as early as June. But now the market thinks we might not get a rate cut at all this year or even a potential rate hike if inflation heats back up. So this is going to be a pretty interesting Fed meeting. Now, typically the Fed treats oil shocks as temporary, so it might not impact the Fed's decision.
That's why I'm really interested to see what the dot plus says. And I'm sure Jerome Powell will get asked a ton of questions about oil and inflation in his press conference today, which starts at 2.30 p.m. Eastern time. So I'll definitely be tuning into that. Also, it's Jerome Powell's second to last meeting as Fed chair. His term expires in May. So we got to soak this in while we can.
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