The Dow, S&P 500, and Nasdaq all closed higher after the Federal Reserve held interest rates steady, a move that sent investors into a frenzy.

The Nasdaq climbed 0.3%, while the Dow and S&P 500 gained 0.2%, continuing the rally sparked by comments on inflation from Fed Chair Jerome Powell.

The market loves Powell’s message

Powell didn’t just hold rates, he hinted at two rate cuts this year alone! That’s all traders needed to hear. Despite ongoing trade tensions and inflation worries, Powell’s “no recession in sight” tone was enough to inject fresh optimism into the market.

But Trump’s tariff tweets stir the pot

The most recent social media fusillade from the President claimed that the Federal Reserve should lower interest rates.

The President said that tariffs were the reason for the economic pressure. He is not the only one concerned about the uncertainty with global trade policies.

Investors would like to know if Powell will fold under the pressure or if he will not cut rates because of inflation concerns.

Powell is not the only one fueling the rally; several economic indicators are surprisingly upbeat:

• Unemployment claims: These are lower than expected, which shows how robust the labor is right now.
• The boom of the housing market: There has been a spike in existing home sales, which highlights a high rate of consumer demand.
• Manufacturing growth has also rebounded and mid-Atlantic factories’ output is rising more.

Who’s winning and losing?

• Darden Restaurants (+7.3%) exceeded profit forecasts despite headwinds.
• Five Below (+7.4%): Strong revenues lifted discount retailer’s stock
• Accenture’s stock fell by 6.5% it was hit by worries over declining contracts with the US government.

Not everyone is thrilled

Even as America enjoys a surge in stock market fortunes, global market indicators are telling a more nuanced story.

• London’s FTSE 100 is down 0.1% as the Bank of England kept its rates unchanged, which led to a cautious market.
• The DAX index in Germany has dropped by 1.4%. This was due to concerns about the
• Hong Kong’s Hang Seng lost 2.2%. The tech sector was on the downside and took the whole index along with it.

The bond market is warning us

Meanwhile, 10-year U.S. Treasury yields dipped to 4.20%, which is a sign that the rally continues to lack some degree of investor conviction.

With lingering fears concerning “stagflation” (high inflation + slow growth), some analysts insist that volatility will continue to be a prominent factor.

Market analysts foresee short-term stock price increases but warn of possible renewed pressures later in the year.

If the Federal Reserve acts on its inclinations to decrease rates, further stock price increases could follow. Should this inflation continue its hold, brace for some bumpy trading.