19.09.2023: Wall Street cautious as Fed meeting looms. Outlook for S&P 500, USD, CAD, Bitcoin
At the start of the week, trading activity looks somewhat muted. Even though trading volume was average, market participants were acting cautiously. Worries regarding the chip market were offset by the steady rally in oil prices. As a result, the session on Monday closed at the opening levels, just as we had predicted.
On Tuesday, the macroeconomic data and fresh news breathed some life into the stock market, but strong movements are still unlikely today. InstaForex analysts are ready to present you with the latest market news and forecasts. Welcome to our fresh review of the US financial market. As mentioned earlier, by the closing bell yesterday, major US stock indices stayed almost at the same levels. The Dow Jones Industrial Average edged up by a modest 0.02%, the tech-heavy Nasdaq saw a small rise of 0.01%, and the benchmark S&P 500 index climbed by 3 points, or 0.07%, to settle at 4,453.
On Tuesday, the stock market was trading mixed. The release of fresh real estate data from the US pushed the major stock indices into the red. Futures indices were moving down by 0.2% to 0.3%. The trading range for the S&P 500 index is seen between 4,410 and 4,470.
Yesterday, Wall Street adopted a wait-and-see stance while estimating forecasts about the Federal Reserve’s rate decision on Wednesday.
All three major US stock indices ended the volatile session with moderate gains as investors saw no suitable drivers and were not in a rush to trade.
The highlight of the week is the Federal Reserve policy meeting on Wednesday. The regulator is widely expected to halt its rate hiking cycle this time. If so, the Fed funds rate will remain unchanged for the second time since March 2022.
The Federal Open Market Committee is also slated to release its quarterly summary of economic projections, which will incorporate the dot plot – a visual representation of how Fed members see the future trajectory of interest rates.
Currently, 99% of traders are confident that the Federal Reserve will maintain the key rate between 5.25%-5.00% on Wednesday. Furthermore, the likelihood of the FOMC taking a pause in November stands at 69%, as indicated by the FedWatch tool.
The US central bank promised to be flexible and take into account the incoming economic data. The recent inflation report indicated that core consumer prices continue to slow down towards the Fed’s key target of 2%. This suggests that the US economy remains on solid ground.
Yet, there are some headwinds in the form of rallying oil prices that are currently heading for 100 dollars per barrel. Apart from the soaring fuel prices stirring inflation concerns, fears of a government shutdown have also re-emerged this week.
Treasury Secretary Janet Yellen stated on Monday that while she doesn’t see an imminent risk of a collapse, a government shutdown would "create a situation that could cause a loss of momentum – something we don’t need to see right now."
In the corporate sector, the energy companies’ stocks continued their bullish run, with the energy sector of the S&P 500 leading the growth on Monday.
Shares of chip manufacturer Arm Holdings dropped by 4.5% after Bernstein downplayed the company’s prospects. Also, a rating change from "outperform" to "market perform" status led to a 2.0% dip in Paypal’s securities.
On Tuesday, US stock index futures traded confidently during the European session but slipped into negative territory as the US market opening approached. This shift was attributed to the release of mixed real estate data, which tends to be highly sensitive to the Federal Reserve’s rate hikes.
In August, the number of building permits in the United States jumped by 6.9% to 1.543 million. This was the highest reading in 10 months which exceeded market estimates of 1.443 million permits. In the meantime, US housing starts plummeted by 11.3% to 1.283 million in August. This was the lowest level since June 2020 below forecasts of 1.44 million.
At the same time, the sharp slowdown did not surprise markets given tighter financial conditions, rising mortgage rates, and higher house prices in the US.
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00:00 INTRO
00:51 S&P500
01:51 QUOTES
05:14 BUILDING PERMITS (AUG)
05:34 HOUSING STARTS (AUG)
07:28 USDX
09:01 USD | CAD
09:38 CONSUMER PRICE INDEX
10:20 OIL
10:37 BTC | USD
