Concerns about interest rate cuts persist.

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The stock market had a mixed performance on Wednesday as investors analyzed the U.S. Federal Reserve's minutes from the January meeting. The benchmark index rose by 0.13%, while the rose by the same amount. However, the tech-heavy sector continued its downward trend, closing down 0.32%.

Nvidia's shares surged more than 8% in extended trading after the company posted earnings that beat estimates and issued optimistic guidance. The chip giant's revenue grew a record 265% from a year ago, driven by strong sales of AI chips for servers.

The Federal Reserve's last meeting revealed that central bank officials were cautious about rapidly lowering interest rates. Additionally, members highlighted the significance of meticulously evaluating incoming data in determining whether inflation is steadily declining to a sustainable 2%.

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What is the predicted range for the 10-year Treasury yield, according to Morgan Stanley Investment Management's Jim Caron, given the uncertain path of U.S. interest rates and its impact on the stock market?

The bottom line

The January minutes showed that Fed officials were cautious about reducing rates prematurely.

Although many members thought rates had reached their peak, there was still uncertainty about the inflation outlook.

Officials were concerned that if consumer spending remained strong, progress might stall and inflation risks would increase, so the Fed remained "highly attentive" to these risks.

The minutes noted that there is a possibility that aggregate demand momentum may be stronger than currently assessed, due to resilient consumer spending last year, which could have both positive and negative impacts on inflation and economic activity.

The possibility of rate cuts starting in March has decreased, and most traders now anticipate the first cut occurring in the middle of the year.

The meeting took place prior to the release of the January jobs report and the unexpectedly high consumer and producer price data.

Ian Shepherdson, the chief economist at Pantheon Macroeconomics, wrote that policymakers will feel more vindicated and less eager to ease after seeing those numbers.

The essence of turning points is that they can bring about rapid changes, and we anticipate that the labor market and inflation data by the May meeting will indicate that the Fed must loosen its monetary policy.

If the central bank maintains an overly restrictive stance for too long, it could lead to a bumpier landing and further worry investors about the economy.