Market Falls as Fed Opts to Maintain Interest Rates - CNBC

The minutes from the December Federal Reserve meeting, released on Wednesday, showed that none of the Fed members believe it will be appropriate to cut interest rates in 2023. This news sent the market down, with the S&P 500 index narrowly avoiding a "Santa Claus rally", a rally that typically occurs in the last week of December and the first two days of January. The index needs to close above 38.22 for the rally to occur, and it is currently hovering at 38-31. The Dow Jones Industrial Average has also recently gone negative.

Market Falls as Fed Opts to Maintain Interest Rates - CNBC

Travel and leisure stocks have been performing well, with companies such as Carnival and Norwegian raising prices. The reopening of China has also helped boost China stocks, including Wind and Caesars. Other gaming stocks, such as those of Caesars, have also done well. On the other hand, last year's winners, including healthcare and energy stocks, have underperformed.

In the bond market, the treasury complex saw a dip in yields going into the Fed meeting, but has since recovered. The two-year yield saw a lot of volatility, but it started to drift down slightly before 2pm Eastern time, and then reversed after the release of the Fed minutes. It is currently the only maturity with a higher yield and lower price on the entire curve. The ten-year yield has been trending lower and is on pace to close at its lowest yield since the 22nd. The June Fed fund futures are still implying a terminal rate of 2.513%, and the dollar index has seen more bulls enter as the market believes the Fed will take a tough stance on inflation and keep interest rates higher.

Overall, the Fed's stance has been seen as restrictive, and most officials believe it will be maintained in order to address potential inflationary pressures. This comes as the December jobs report showed the weakest job growth in a couple of years, leading to concerns about a potential recession. However, some stocks have performed well in the face of this news. Workforce management software company Salesforce, for example, has announced a 10% cut in its workforce, but its stock is still doing well. Other notable performers include Disney, Intel, and Boeing, which has been on a big tear and is probably the biggest winner for the Dow in the first two days of the year.