5 Things You Need to Know to Start Your Day: Americas

Good morning. The Fed’s decision sparks a rally and sends stocks to new records, the AI frenzy burnishes that further and Reddit is set to d [View in browser]( [Bloomberg]( Good morning. The Fed’s decision sparks a rally and sends stocks to new records, the AI frenzy burnishes that further and Reddit is set to debut. Here’s what’s moving markets. — [Sam Unsted]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Fed holds The Federal Reserve [kept interest rates on hold]( and largely stuck to its path for interest-rate cuts to come later in the year, with policymakers undeterred by the recent pickup in inflation data. Chair Jerome Powell said prices pressures will continue to ease and it will likely be appropriate to start cutting later in 2024. By a narrow majority, officials stuck to the expectation of three cuts this year. Powell also indicated that slowing the pace of the reduction in the Fed’s bond holdings will come into view [“fairly soon.”]( ‘Goldilocks’ narrative The lack of any pushback from Powell against the optimism among traders for interest-rate cuts caused [buy signals to flash across Wall Street](. “The ‘Goldilocks’ narrative is still very much in play,” said Eric Sterner at Apollon Wealth, with the Fed sticking to its projection for cuts while also raising economic growth forecasts. [Stocks hit new records](, with the S&P 500 closing above the 5,200-point mark and feeding into gains in Japan, Hong Kong and across Europe. Treasuries rose too, the dollar fell and metals prices bounced, with [gold passing $2,200 an ounce]( for the first time. AI frenzy continues More good news at the close came courtesy of computer memory chip maker Micron Technology. It gave a [surprisingly strong revenue forecast]( for its current quarter as it catches the wave of demand for artificial intelligence hardware. It has surged in premarket trading, up by around 18%, heading for a new record and bringing peers along for the ride. The AI frenzy was also on display as[ Astera Labs](, a semiconductor connectivity firm, which jumped by 72% on its trading debut. Reddit’s debut That post-listing pop and a growing recovery for IPO activity will be tested again today as [social media platform Reddit starts trading]( following its long road to market. It priced the offering at the top end of the range, raising $748 million and implying a fully-diluted valuation for the business of about $6.4 billion. That’s compared to the $10 billion valuation it had back in 2021, when it first launched the IPO plans. And the group reserved about [8% of the offering for its most prolific users](, putting part of the fate of its debut into their hands. Coming Up… US manufacturing and services PMIs are on the slate for more insight into the health of the economy. The earnings calendar is thinner, topped by Olive Garden-owner Darden Restaurants and consultant Accenture. Sportswear giant Nike, delivery group FedEx and yoga fixture Lululemon are all set to report after the close. Despite the euphoria elsewhere in US stocks, Apple shares are dipping in premarket trading with the Justice Department [said to be preparing to sue]( the iPhone maker for antitrust violations as soon as Thursday. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - Switzerland’s central bank [surprises markets]( with a rate cut. - A quant [bounces back]( with a leaner fund. - UBS [closing thousands]( of smaller Credit Suisse accounts in Asia. - Shohei Ohtani’s interpreter [fired amid gambling reports](. - A Neuralink patient controlling video games [with his mind](. And finally, here's what Joe’s interested in this morning Stocks rallied yesterday after the Fed decision. And stock futures are up again today. So I guess that means the decision was a dovish one. No, but seriously, there was something simple and straightforward about the Fed yesterday. It maintained its expectations for three rate cuts, even as it lifted its outlook for inflation and growth. That's dovish. During the press conference, Powell said that some sort of unexpected weakening in the labor market might spur the decision to begin the cutting cycle. He also said that rapid labor market growth from here would, in and of itself, not be a reason to hold off on rate cuts. Also dovish. As for the warm inflation prints that we've seen so far in 2024, Powell didn't seem wildly concerned. For now they're viewed as bumps in the road, with the FOMC maintaining its confidence that policy remains "restrictive". So that's dovish. He also noted that the Fed didn't get overly exercised about the rapid cooling in inflation during the second half of 2023, and so a couple of hotter prints don't change things very much. Stocks are at new highs. Gold is too. There's a simplicity and straightforwardness to this one. [On a separate note, on today's Odd Lots podcast](, we take a dive into the crackup in the home insurance markets, in places like Florida and California. These states have seen premiums soar and in some cases carriers just abandoning the market. There's a lot of reasons behind all this, some of them structural and some of them cyclical. But there was one nugget in there, that was interesting for overall inflation and the Fed. As one of our guests Amias Gerety (who sits on the board of an insurer) explained, when the Fed jacked up rates that caused losses at the reinsurance companies who who hold a lot of bonds in their portfolio. When the reinsurers take losses, that limits their capacity to back up the insurers. And when that capacity is constrained, homeowners pay higher premiums. So it's a subtle, yet backdoor, way in which you can draw a line from the Fed hiking cycle to higher consumer prices. It's just one of many factors in one category, but an interesting one. Follow Bloomberg's Joe Weisenthal on X [@TheStalwart]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. 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