Fed Holds Rates Steady, Stocks and Crypto Surge
Cryptocurrency and equities markets rally as Federal Reserve signals possible rate cuts ahead, despite tariffs turbulence.
The Federal Reserve kept interest rates unchanged at its policy meeting on Wednesday, maintaining the federal funds rate in the range of 4.25%-4.5%. While the decision was widely expected, investors cheered the central bank’s updated economic projections, which still include two potential rate cuts later this year. Stocks surged following the announcement, while Bitcoin and other cryptocurrencies also posted significant gains.
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Markets Embrace Stability
Wall Street responded positively to the Fed’s cautious but steady stance. The Dow Jones Industrial Average (DJI) climbed 383 points, or 0.92%, to close at 41,964.63. The S&P 500 (SPX) gained 1.08% to reach 5,675.29, while the tech-heavy NASDAQ Composite (IXIC) advanced 1.41% to 17,750.79.
Tech stocks played a crucial role in the rally. Apple (NASDAQ: AAPL) +1.2%, Microsoft (NASDAQ: MSFT) +1.12%, Alphabet (NASDAQ: GOOGL) +2%, Amazon (NASDAQ: AMZN) +1.41%, and Meta Platforms (NASDAQ: META) +0.29%, all posted gains. Nvidia (NASDAQ: NVDA) rose 1.81%, rebounding from earlier losses this week, while Broadcom (NASDAQ: AVGO) added 3.66%.
Super Micro Computer (NASDAQ: SMCI) jumped 5.8% after unveiling new AI-driven server products powered by Nvidia’s latest chips. Meanwhile, Caesars Entertainment (NASDAQ: CZR) gained 5.66% following the announcement of two new independent board members from Icahn Enterprises (NASDAQ: IEP).
Boeing (NYSE: BA) surged 6.84% after securing a deal to sell 17 new aircraft to Japan Airlines. Sentiment also improved after CFO Brian West noted an improvement in the company’s cash position.
Powell Addresses Inflation Concerns
Federal Reserve Chair Jerome Powell acknowledged economic uncertainties but reinforced the central bank’s commitment to its dual mandate of price stability and full employment.
In its FOMC press release, the Federal Reserve stated:
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty around the economic outlook has increased. The Committee is attentive to the risks to both sides of its dual mandate.
During the press conference, Powell reiterated that the Fed remains open to adjusting policy as necessary.
“If the economy remains strong, and inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer,” stated Powell. “If the labor market were to weaken unexpectedly, or inflation were to fall more quickly than anticipated, we can ease policy accordingly.”
Investors welcomed Powell’s remarks, viewing them as a sign that the central bank remains flexible. Riskier stocks outperformed, with the Invesco S&P 500 High Beta ETF (NYSE Arca: SPHB) jumping 1.58%. In contrast, the Invesco S&P 500 Low Volatility ETF (NYSE Arca: SPLV) lagged, rising just 0.3%.
FOMC Press Conference, March 19, 2025
Source: Federal Reserve YouTube
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Treasury Yields and Commodities React
Bond markets reflected the Fed’s cautious tone. The 10-Year Treasury (US10Y) yield dipped to 4.25%, signaling investor confidence that future rate cuts remain on the table.
Gold Futures (GC) extended their rally, setting a new record above $3,050 per ounce. West Texas Intermediate (WTI) crude oil prices also edged higher, gaining 0.4% to settle at $67.20 per barrel.
Cryptocurrencies Rally on Dovish Hints
The Fed’s steady stance ignited a rally in the cryptocurrency market. Bitcoin (BTCUSD) climbed 4.5% to $85,500, marking its highest level since early March. Strategy (NASDAQ: MSTR), a major holder of Bitcoin, surged over 7.43% in response to the price appreciation.
Ethereum (ETHUSD) and Solana (SOLUSD) each gained 7%, while XRP (XRPUSD) jumped 10% after Ripple CEO Brad Garlinghouse confirmed that the SEC would not appeal its case against the company. Crypto mining stocks also benefited, with Bitdeer (NASDAQ: BTDR) soaring 11.44% and Core Scientific (NASDAQ: CORZ) adding 8.23%.
What’s Next?
The Fed’s decision to hold rates steady, coupled with its commitment to monitoring inflation and economic conditions, has provided markets with a sense of stability. However, uncertainties remain, particularly around the impact of tariffs and global economic trends.
Powell emphasized that the central bank will continue assessing incoming data before making any policy adjustments. “You could define the March FOMC meeting with one word: uncertainty,” said Jack McIntyre, portfolio manager at Brandywine Global. “That term was peppered throughout both the FOMC statement and Powell’s press conference. Therefore, it wasn’t a dovish or hawkish pause but an uncertain pause.”
Investors now turn their attention to upcoming inflation reports and economic indicators, which could influence the timing and extent of any future rate cuts. For now, markets remain optimistic, with equities and crypto assets benefiting from the Fed’s measured approach.
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Disclaimer: Wealthy VC does not hold a position in any of the stocks, ETFs or cryptocurrencies mentioned in this article.
