The rebound on Wall Street extended on Wednesday following a policy announcement from the FOMC. The FOMC hiked its key rate by 75 basis points as expected and downgraded its assessment of the economy which is less than the whisper numbers. The committee also said additional hikes would be appropriate at the next few meetings which put interest rates on track to hit 3.0% or higher by the end of the year and the odds are tilted in favor of higher. The takeaway for the market is the pace of hikes may slow over the next two meetings.

While many of the pundits think we are seeing the peak of inflation and FOMC interest action that outlook is far from assured. The PCE price index, due out on Friday, is expected to accelerate by 20 basis month over month at the core level and it could come in higher. Worse, the outlook given by the bulk of S&P 500 companies including defensive Consumer Staples companies is more price hikes and higher inflation are on the way. The key takeaway from all this is that corporate margins will continue to be under pressure and the cost of doing business and making large purchases is on the rise.