The Federal Reserve wrapped up its latest Open Market Committee meeting yesterday and, as expected, maintained its fed funds target rate at the 4.25-4.50% level. This was the third consecutive meeting at which the central bank held policy steady after cutting rates three times in late 2024. The non-decision indicates that the Fed still has concerns over lingering inflation and is keeping an eye on the overall economy. Further, the central bankers, like the rest of the country, are uncertain about the potential impact on GDP and prices from the recent tariff initiatives. CPI inflation has indeed fallen from readings above 9.0% in 2022 to readings below 3.0% -- but lately has struggled to extend its downward trend toward the central bank's goal of 2.0%. Meanwhile, though, the unemployment rate is still historically low, even as GDP growth dipped into negative territory last quarter due to a quirky import number. Based on the healthy employment environment, the economy is not in dire need of lower rates. Yet. Yesterday's meeting did not include any projection materials. At the Fed's meeting in March, the central bankers updated their economic and interest-rate forecasts. These call for economic growth in the 1.8%-2.0% range through 2027, and an inflation rate down to 2.0% by 2027. At that point, the Fed anticipates its federal funds target rate to be 3.0%-3.25%, implying a real yield of about 1.25%. That's a forecast for five rate cuts over the next 30 months.

3M is a diversified Industrial company, with worldwide operations organized into four segments. The stock is a component of the Dow Jones Industrial Average and the S&P 500. Headquartered in Saint Paul, Minnesota, the company employs approximately 85,000 people.

Recession Clues How close is the U.S. economy to a recession? This week is jam-packed with clues, as economic data pours in and earnings reports continue at peak volume. Last week, the Dow Jones Industrial Average gained 2.5%, the S&P 500 was up 4.6%, and the Nasdaq rose 6.7%. All three indices are still negative for the year to date, with the Dow and the S&P 500 down 6%, and the Nasdaq off 10%. The earnings calendar includes Domino's Pizza and MGM Resorts on Monday; Starbucks, Coca-Cola, Bookings Holdings, UPS, and Visa on Tuesday; Microsoft, Meta Platforms, Caterpillar, and GE HealthCare on Wednesday; Apple, Amazon, McDonald's, CVS, Airbnb, and Eli Lilly on Thursday; and Chevron and Exxon and Friday. So far, 36% of S&P 500 companies have reported and earnings for the quarter are up 10% from the prior-year quarter. That is above the consensus call for EPS growth of about 3%-8% and follows 17% growth in 4Q24 and 9% growth in 3Q24 (according to LSEG). Healthcare currently is the leading sector, up 39%, and Energy is at the bottom, down 18%. For 2025, our full-year earnings estimate is for low-double-digit growth from 2024. On the economic calendar, the Personal Consumption Expenditures Index (on inflation) and the latest update on GDP are both due on Wednesday. Other releases of note are Nonfarm Payrolls on Friday, Personal Income on Wednesday, and ISM Manufacturing on Thursday. The Economic Call of the Week from Argus' Chief Economist Chief Graja, CFA, is that we likely will not be forecasting for a recession after all the data comes in. For Nonfarm Payrolls, our estimate is for an increase of 130,000 and the consensus is about the same. A month-over-month decline would be a recession warning. We do not expect a year-over-year decline in the total number of workers on establishment payrolls, but that would also be a warning. Some might be concerned if the year-over-year increase is less than 1%. Turning to Personal Income, the year-over-year change excluding transfer receipts could be a very important number. We believe this is one of the indicators that the National Bureau of Economic Research Recession Committee watches very closely. Growth has been declining. It was 1.13% in February down from 3.28% last March. We would be happy if growth stays above 1.1% or even 1%. A decline would be a concern. And finally, our forecast for ISM Manufacturing is for an index value of 48.6. The consensus is 47.9. A decline to 42.3 would be a concern, but a reading below this level would likely need to be in place for several months to provide a recession warning in the absence of other clear signals. Turning to other important data, the Atlanta Fed GDPNow measure now forecasts a decline of 2.5% for 1Q, signaling contraction. We recently lowered our forecast for GDP and now expect expansion of 1.4% in 1Q and 1.3% for all of 2025. The Cleveland Fed Inflation Nowcast is now at 2.4% for CPI in April, in-line with the March rate. Mortgage rates ticked down two basis points (bps) last week, with the average 30-year fixed-rate mortgage now at 6.81%, according to FreddieMac. Gas prices fell three cents to an average of $3.14 per gallon for regular gas. The next Fed rate decision is on May 7, with odds at 10% for a rate cut, according to the CME FedWatch rate tool. The next meeting after that is on June 18, when odds jump to 63% for a cut. We continue to forecast two 25 bps rate cuts in 2025, both in the back half of the year.

After a tough Monday, stocks fully reversed on Tuesday, this based on yet new headlines coming from the White House. So the game of cat and mouse continues, with many retirement accounts caught in the middle. The S&P 500 (SPX) and S&P 100 popped 2.5%, while the Nasdaq and Nasdaq 100 (QQQ) ripped higher by 2.7%. Are we any closer to settling this bull/bear standoff? Probably not. Market breadth was strong on Tuesday, with 2,490 more NYSE advancers than decliners. The reading of NYSE advances/total issues was strong at 89%, while NYSE advancing volume/total volume was at 81%. Since April 4, we have had four days of strong breadth and four days of weak breadth. If strong days take over and weak days disappear, that would be a good sign that the bulls are taking back control from the bears. We think gold is topping and the yellow metal traced out an ugly bearish engulfing candle-stick on Tuesday. But bitcoin bottomed on April 8 and has been on a pretty good run ever since. Bitcoin reached $91,800 on Tuesday, up from a recent closing low of $76,300, or about 20%. We have seen a number of daily gains with above-average volume, a good sign of institutional accumulation. The crypto currency looks to have completed a five-wave decline and has broken its bear-market trendline off the peaks since earlier this year. In addition, price has jumped above chart resistance at $89,000, with the next piece at $96,000. (Mark Arbeter, CMT)