CWS Market Review – June 21, 2025
“There are two times in a man’s life when he shouldn’t speculate: when he can afford to and when he can’t.” – Mark Twain
On Wednesday, the Federal Reserve voted to leave interest rates unchanged. This move was widely expected. The target range for the overnight Fed funds rates is still 4.25% to 4.50%. The rate hasn’t changed in six months, but a rate cut may be coming this fall.
For now, the Fed is in a difficult spot. Fed Chairman Jerome Powell made it clear that the Fed still sees a threat of inflation. The central bank is worried about the potential inflationary impact of tariffs. I think the Fed is probably overreacting.
Powell’s slow response to inflation a few years ago certainly damaged the Fed’s credibility. It took several rate hikes to get inflation back down to a manageable level. The Fed doesn’t want to see all that work go to waste.
Yet at the same time, the Fed is concerned that the economy could be in rough waters later this year. The economy is going along well enough for right now, but it’s unclear how long that will last. President Trump wants to see lower rates right now. This week, the president called Chairman Powell a “real dummy.”
Still, according to the Fed’s outlook, the committee sees itself cutting interest rates two times this year. The committee also raised its forecast for interest rates for next year and in 2027. I’ll explain what it means in a bit.
Despite the geopolitical events of the past week, the stock market has mostly been nonplussed. On Friday, the S&P 500 fell for the third day in a row, but these losses weren’t very large. The index is still above its 50- and 200-day moving averages.
One important change is that the market has broadened out this week, which means it’s not just a small group of stocks pulling everyone else along. That’s good to see. On our Buy List, we now have four 30+% winners this year: Cencora, Heico, IES Holdings and Amphenol.
On Monday, we’ll get our last earnings report of this cycle. Before the opening bell, FactSet is due to report its fiscal-Q3 earnings. I like FactSet. The company recently raised its dividend for the 26th year in a row. I’m expecting more good news.
Before we get to that, though, let’s first take a look at what the Federal Reserve had to say this week.