Shares rose across the board Wednesday, extending gains later in the session after the Federal Reserve weighed in at the close of its two-day March meeting.
The central bank left key interest rates unchanged, as expected. Happily for the markets, it also stuck to its previous guidance of two rate cuts this this year. It anticipated higher inflation — in large part due to tariffs — and slower economic growth. Fed chair Jerome Powell said the tariff impact on prices could be “transitory” and that the risk of recession is low.
That said, “There are so many things we don’t know,” he told reporters at a press conference, and “uncertainty is remarkably high.”
Media and tech stocks closed in the green pretty much across the board led by Roku (up 7%), Imax (up 6%), Warner Bros. Discovery (up 5%) and a few others that outpaced the broader market. Major media companies, broadcasters and exhibitors all ended higher.
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The Dow Jones Industrial Average gained nearly 400 points. The Nasdaq, S&P 500 and Russell 3000 rebounded too.
Markets were in dire need of some calm after a hellish month of tariff chaos that eroded trillions of dollars of value and pushed both the S&P and Nasdaq into official correction territory.
“Recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated,” the Fed’s Open Market Committee said in a statement. The Fed’s dual mandate is to seek maximum employment and keep inflation in check at about 2% level. It uses interest rates as a tool to keep them in balance.
Powell said the U.S. has a “balanced labor market” and that high-profile layoff of tens of thousands of federal workers by Elon Musk-led Department of Government Efficiency (DOGE) has not trickled into national stats — yet at least.
President Donald Trump’s global tariffs, and tariff talk, that started early this year sparked trade wars with Canada, Mexico, China and Europe that are expected to result in higher consumer prices. The latest CPI data, however, showed inflation rose less than expected in February, although, as the Fed had said, still “somewhat elevated.”
Powell cautioned that it’s still early days. The administration is planning a big round of import taxes to take effect on April 2.
If and as prices rise, Powell also said that they’ll try but it’s incredibly complicated to separate out what is tariff related and what is not. Manufacturers can raise prices in anticipation of tariffs amid all the noise He noted a previous round of tariffs that hiked prices for washing machines, but the price of dryers – not subject to tariffs — also went up.
The Fed said its ongoing assessments “will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”
Powell was also asked, as he has been for the past five months, if he’s concerned that the Fed’s independence is threatened. That’s especially pressing now as Trump yesterday fired the two Democratic FTC Commissioners, another of his outlier moves step into uncharted territory.
The Fed chief declined respond directly to that query today but noted that he’s answered it before and has nothing more to add. After the Fed’s November meeting, Powell, in response to a question, said that he would not resign if President-elect Donald Trump asked him to and that he doesn’t think the president has the legal authority to fire him.
“If he asked you to leave, would you go?” asked a journalist.
“No,” Powell responded.
“Do you think that legally you are not required to leave?”
“No.”
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