Since this is a Federal Reserve announcement day, markets could easily go haywire later. But for now, stocks are mixed, while Treasuries are rising in price. Crude oil is a bit higher along with gold and silver, while the dollar is weaker.

On the news front…

Today is “Fed Day”...another important one following closely on the heels of yesterday’s “CPI Day.” We’ll find out this afternoon whether Federal Reserve Chairman Jay Powell and his fellow policymakers decided to stand pat – or decided to hike interest rates by another 25 basis points. But markets are definitely priced for a pause, especially after yesterday’s 0.7% S&P 500 rally in response to tamer inflation data.

Should we get a hike, stocks would likely take an immediate header. The prognosis is more mixed if we get no move. A lot will depend on whether Powell suggests any pause will be an extended one at his post-meeting press conference...or whether he hints the Fed could hike again soon. Its next two meetings are scheduled for July 25-26 and September 19-20. Buckle up!

Last year was a great one for energy and energy stocks. This year has...not been. The Energy Select Sector SPDR Fund (XLE) is down about 6%, while crude oil is trading in the $70 range – down from a peak near $120 last year.

Energy Select Sector SPDR Fund (XLE)
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Chinese economic stimulus should help on the demand front, while OPEC+ production cuts should tighten oil supply. But a key LONGER-term issue is the rise of electric vehicle (EV) demand. The International Energy Agency expects oil demand to keep rising solidly over the next half-decade. But demand growth will then begin to trail off due to the ongoing transition away from gasoline-powered vehicles in advanced economies.

Finally, former President Donald Trump pled not guilty in response to a 38-count federal indictment containing charges related to possession and storage of protected documents after he left office. The legal process will now play out for several months.