{"id":13647,"date":"2025-02-03T22:13:55","date_gmt":"2025-02-03T22:13:55","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13647"},"modified":"2025-02-03T22:13:56","modified_gmt":"2025-02-03T22:13:56","slug":"fed-holds-rates-steady-deepseek-shakes-up-ai-housing-market-strengthens","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/fed-holds-rates-steady-deepseek-shakes-up-ai-housing-market-strengthens\/","title":{"rendered":"Fed Holds Rates Steady, DeepSeek Shakes Up AI, Housing Market Strengthens"},"content":{"rendered":"\n<p>Staying ahead in today\u2019s market means focusing on what truly matters. This week\u2019s <em>Steady Investor<\/em> breaks down three key themes driving the investment landscape:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"has-black-color has-text-color has-link-color wp-elements-c9a1d1015886fd2d37835f403ca04982\"><a>Federal Reserve holds rates steady<\/a><\/li>\n\n\n\n<li>The day DeepSeek turned tech and Wall Street upside down<\/li>\n\n\n\n<li>Home sales jump at the end of 2024<\/li>\n<\/ul>\n\n\n\n<p class=\"has-black-color has-text-color has-link-color wp-elements-7657bc85722eefbef8e604fbf80be0f6\"><a><strong>Federal Reserve Holds Rates Steady, As Expected<\/strong><\/a><strong> \u2013 <\/strong><a>The Federal Reserve wrapped up its January policy meeting with a decision that did not surprise markets. They held rates steady at a range of 4.25% to 4.5%, reflecting their shift to a more cautious &#8220;wait-and-see&#8221; stance. The Fed cited recent economic data as justification for their positioning, with the latest Core CPI reading indicating inflation remains above the Fed&#8217;s 2% target. Core prices rose by 3.3% over the past year, and services inflation remains elevated at 4.6%. The Fed can also point to strong economic data to suggest the economy does not need rate cuts. The three-month average of jobs growth is 173,000, and the U.S. consumer and broad economy continue to exhibit strength. The Bureau of Economic Analysis reported that GDP grew by 2.8% annualized in the third quarter, and initial estimates for Q4 2024 point to 2.5% growth. We also know that the Fed is focused on the impact of policy changes from the Trump administration, such as tax reductions, stricter immigration policies, and new tariffs. In the right combinations, these initiatives could exert upward pressure on inflation, and the last thing the Fed wants is to have to reverse course on rates, in our view. Overall, monetary policy remains restrictive with the fed funds rate hovering above the so-called \u201cneutral rate,\u201d which we think could be somewhere in the 3.5% range. Two rate cuts are projected in 2025, but it does not appear likely that these cuts would come in the first quarter as the Fed awaits more inflation data and seeks to gain a better understanding of Trump administration policies and their potential impact. As illustrated above, there are very few signs that the fed funds rate of 4.25% to 4.5% are serving as headwinds to economic growth, and the Fed seems likely to lean on this fact as they pivot into \u2018wait-and-see\u2019 mode.<sup>1<\/sup><\/a><\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\">Navigate Tax Season with Confidence: Get Your Free 2025 Tax Reference Guide<\/a><\/u><\/strong><\/p>\n\n\n\n<p>Tax season can be complex, whether you&#8217;re filing on your own or with a professional. Questions about updated rules, deductions, and limits are inevitable.<\/p>\n\n\n\n<p>That\u2019s why we\u2019re offering our <strong><a href=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\"><em><u>2025 Tax Reference Guide<\/u><\/em><\/a><\/strong><sup><a href=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\">1<\/a><\/sup>\u2014a precise and user-friendly resource designed to address the most common tax concerns.<\/p>\n\n\n\n<p>This guide provides:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Key dates for the 2025 tax season<\/li>\n\n\n\n<li>Updated tax brackets, rates, and deduction details<\/li>\n\n\n\n<li>Complete IRA and retirement plan contribution limits<\/li>\n\n\n\n<li>Tax information for Education, Social Security, HSAs, Estates, Charitable Giving, and more<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to make informed financial decisions this tax season, click the link below to get your free copy:<\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\">Download the <\/a><\/u><em><a href=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\"><u>2025 Tax Reference Guide<sup>2<\/sup><\/u><\/a><\/em><\/strong><\/p>\n\n\n\n<p class=\"has-black-color has-text-color has-link-color wp-elements-775880eabf8aaf9b59fc93e24d1326da\"><a><strong>DeepSeek Splashes Cold Water on the Big Tech AI Theme <\/strong><\/a><strong>\u2013 <\/strong><a>Artificial intelligence has been a major investment theme for the past couple of years, specifically in the infrastructure arena. Major technology companies were investing hundreds of billions of dollars to develop large language models (LLMs), which require enormous amounts of computing power and advanced GPUs (semiconductor chips) to train. An announcement last week seemed to shake up this entire premise. Chinese AI startup DeepSeek unveiled an advanced AI model that rivals models being developed in the U.S., only DeepSeek\u2019s model required significantly lower computing power and cost to build. DeepSeek&#8217;s approach relies on optimized algorithms that reduce the dependency on expensive high-performance hardware, potentially reshaping the demand for AI infrastructure globally. Investors watching this story should note that it follows a historical pattern that we would argue will likely apply to the nascent field of artificial intelligence. That is, while pioneers often lead initial advancements, they don&#8217;t always maintain long-term dominance. This outcome could be good for markets and consumers in the long run\u2014competition could enhance the sector by making AI technology cheaper and more widely available, fueling broader adoption.<sup>3<\/sup><\/a><\/p>\n\n\n\n<p class=\"has-black-color has-text-color has-link-color wp-elements-d432b02ce1c3d686d507ca9e5b201d6a\"><a><strong>Is the U.S. Housing Market Getting Back on Solid Footing<\/strong><\/a><strong>? <\/strong><a>If there was one word to summarize the U.S. housing market for much of 2023 and 2024, it\u2019d be: <em>sluggish. <\/em>In 2024, existing home sales fell to their lowest level since 1995, primarily due to persistently high mortgage rates, increased home insurance, and rising property tax costs. The average rate for a 30-year fixed mortgage fluctuated between 6% and 8%, deterring many potential sellers and buyers. Some signs of hope emerged as the year ended, however. In the realm of new home sales, 2024 held its own. In December, U.S. new single-family home sales rose by 3.6%, reaching a seasonally adjusted annual rate of 698,000 units, as reported by the Commerce Department. This increase marked a 6.7% year-over-year growth for the month, culminating in an estimated 683,000 new homes sold throughout the year\u2014a 2.5% rise from 2023. The uptick in new home sales is attributed to builders offering incentives such as mortgage rate buydowns and price reductions, making new constructions more appealing amid high mortgage rates and elevated home prices. These strategies have positioned new homes as competitive alternatives to existing properties, which remain scarce in inventory. It\u2019s also relevant to GDP growth, as new home investment is the main way real estate contributes to output.<sup>4<\/sup><\/a><\/p>\n\n\n\n<p><strong>Prepare for Tax Season with Zacks Tax Reference Guide &#8211; <\/strong>This time of year, taxes are top of mind for many investors. To make navigating tax season easier, we\u2019re offering our free <strong><a href=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\"><em><u>2025 Tax Reference Guide<\/u><\/em><\/a><\/strong><sup><a href=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/tax-reference-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_02_03&amp;content=tax_reference\">5<\/a><\/sup>\u2014a trusted resource designed to answer your most pressing questions and help you plan with confidence.<\/p>\n\n\n\n<p>Inside, you\u2019ll find:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Key dates for the 2025 tax season<\/li>\n\n\n\n<li>Updated tax brackets, rates, and deduction details<\/li>\n\n\n\n<li>Complete IRA and retirement plan contribution limits<\/li>\n\n\n\n<li>Tax information for Education, Social Security, HSAs, Estates, Charitable Giving, and more<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more, click on the link below to get your free copy:<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fed takes a &#8220;wait-and-see&#8221; approach to rate cuts, Chinese startup DeepSeek leaps to the head of the AI pack, buyer incentives spur an uptick in new home sales.  <\/p>\n","protected":false},"author":3,"featured_media":13584,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-13647","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13647","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=13647"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13647\/revisions"}],"predecessor-version":[{"id":13648,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13647\/revisions\/13648"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media\/13584"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13647"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13647"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13647"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}