Stock indices finished today’s trading session in the red ahead as the Federal Reserve’s interest rate decision is only a day away. Indeed, the Nasdaq 100 (NDX), the S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) fell 0.22%, 0.21%, and 0.31%, respectively.
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The energy sector (XLE) was the session’s laggard, as it lost 0.94%. Conversely, the healthcare sector (XLV) was the session’s leader, with a gain of 0.1%.
Furthermore, the U.S. 10-Year Treasury yield increased to 4.37%, an increase of six basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 5.1%.
The Atlanta Federal Reserve updated its latest GDPNow reading, which allows it to estimate GDP growth in real time. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Currently, it estimates that the economy will expand by about 4.9% in the third quarter.
This is unchanged compared to the previous estimate, which can be attributed to recent releases from the U.S. Census Bureau and the U.S. Bureau of Labor Statistics.
Last Updated 1:20PM EST
Stock indices remain in the red so far in today’s trading as oil prices continue their upward momentum. Indeed, prices seem to be headed toward a $100 per barrel environment, according to Mike Wirth in a Bloomberg interview, Chevron’s (NYSE:CVX) CEO. This trend is fostered by dwindling U.S. shale oil output and OPEC’s move to reduce oil supplies amid market volatility and global economic uncertainties.
Despite this, Wirth maintains a positive outlook on the global and U.S. economy, observing that they have managed to withstand the price surges thus far. Reflecting on the year, crude oil and several other energy commodities have seen substantial price fluctuations, marking a volatile period in the market.
On the other side of the economic spectrum, the U.S. Federal Reserve is holding off on easing liquidity in the economy until there is a significant reduction in wages, noted Brent Schutte, the CIO of Northwestern Mutual Wealth Management Company, to CNBC. This move is anticipated to counterbalance the current yearly wage increase of 4.3%, which Schutte believes is inconsistent with the goal of maintaining a 2% inflation rate.
The aim is to retract the wage growth to a range of 3.2-3.5%, a target that seems plausible only with a heightened labor force participation rate. Schutte foresees a potential recession, predicting the Fed will eventually cut rates to stabilize the fixed-income market amid growing economic uncertainties.
Last Updated 9:41AM EST
Equity markets are in the red so far into today’s trading session. The Census Bureau released its U.S. Housing Starts report today, which measures the change in new residential buildings that began construction in the reported month on an annualized basis.
In August, housing starts came in at 1.283 million versus expectations of 1.44 million. In addition, on a month-over-month basis, housing starts fell by 11.3%. This follows a 2% increase in last month’s report.
Nevertheless, U.S. Building Permits beat expectations, with a print of 1.542 million compared to the forecast of 1.44 million. This was an increase from the prior month’s report, which came in at 1.443 million, equating to an increase of 6.9% month-over-month.
Published: 4:23AM EST
U.S. Futures are jittery on Tuesday morning as traders anticipate the outcome of the two-day Federal Open Market Committee (FOMC) that begins today. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are up by 0.10%, 0.12%, and 0.12%, respectively, at 4:12 a.m. EST, September 19.
In the meantime, WTI crude oil futures continue their upward trajectory, hovering around $92.60 as of the last check. Further supply cuts by Russia and Saudi Arabia could lead to higher oil prices going forward.
Fed Chair Jerome Powell will disclose the interest rate decision on September 20, followed by his speech. Traders largely expect the Fed to hold rates steady on Wednesday and increase rates at the November meeting. However, the Fed’s tone (hawkish/dovish) for the future course is expected to drive the markets for days to come. Fed’s monetary policy decision is going to be data-driven, and recent reports suggest that the labor market continues to remain resilient.
Economic reports due today include August’s Building Permits and Housing Starts. Meanwhile, aftermarket automotive parts retailer AutoZone (AZO) is set to report its Q4FY23 results on Tuesday, before the bell. Also, Instacart priced its initial public offering (IPO) at $30 per share on Monday, bringing the grocery delivery company’s valuation to $9.9 billion on a fully diluted basis. Instacart’s IPO fetched $660 million through the sale of 22 million shares. Shares are scheduled to start trading on the Nasdaq today, under the ticker symbol “CART”.
Further, the strike by the United Auto Workers (UAW) union at plants of Ford (NYSE:F), General Motors (NYSE:GM), and Stellantis (NYSE:STLA) will enter its fifth day today. At the same time, Ford’s Canadian plants face the possibility of a strike from the Unifor union workers. The union has similar demands to the UAW and is leveraging the situation to get the maximum benefits. As per the extended deadline, Ford has just one more day to negotiate a fruitful contract with the union and avert a strike.
Elsewhere, most European indices are trading in the green on Tuesday morning as markets await the Federal Reserve’s monetary policy decision. Although a rate pause is priced in by traders, it’s the future course that has them nervous.
Asia-Pacific Markets End Mixed on Tuesday
Asia-Pacific indices finished mixed on Tuesday. The minutes from Australia’s central bank’s September 5 meeting that cited “too high” inflation in the nation and a possibility of further monetary tightening dragged down Asian stocks.
Hong Kong’s Hang Seng index ended higher by 0.37%, while China’s Shanghai Composite and Shenzhen Component indices ended down by 0.03% and 0.73%, respectively.
Similarly, Japan’s Nikkei finished lower by 0.87%, while the Topix index ended marginally higher by 0.07%.
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