Opening Comment — Wednesday, September 18, 2024
DJIA: 41,606.18, down 15.90
S&P 500: 5,634.58, up 1.49
NASDAQ: 17,628.06, up 35.93
Stocks higher ahead of Fed rate decision
Stock futures are higher on Wednesday, ahead of the Federal Reserve’s (Fed’s) latest policy decision. While a rate cut is almost certain, investors are split on how large the reduction will be. As of 7:18 AM ET, the Dow is rising 0.1%, while the S&P 500 is up 0.2%. The Nasdaq 100 is increasing 0.3% relative to fair value on the GLOBEX.
U.S. equities were mostly unchanged on Tuesday, as investors evaluated August’s retail sales and industrial production. The former increased slightly, compared to an anticipated decrease, while the latter increased more than projections. The Dow was little changed, while the tech-heavy Nasdaq Composite rose 0.2%. The S&P 500 was little changed with six of 11 sectors finishing in positive territory. The Energy sector was the top performer, rising 1.4%, while the Health Care sector was the bottom performer, falling 1.0%.
On the data front today, the Federal Open Market Committee (FOMC) is expected to reduce the target federal funds rate range by 0.25% from 5.25%-5.50% to 5.00%-5.25%. Mortgage Bankers Association (MBA) mortgage applications increased 14.2% for the week ending September 13 versus the prior week’s increase of 1.4%. Housing starts for August are expected to be an annualized 1.32 million units, up from the prior month’s 1.24 million units, corresponding to an anticipated increase of 6.5% month-over-month (MoM) versus the prior month’s decrease of 6.8%. Meanwhile, August’s building permits issued are projected to be an annualized 1.41 million, up slightly from the prior month’s revised 1.40 million, corresponding to an expected increase of 1.0% MoM versus the prior month’s revised decrease of 3.3%. Department of Energy (DOE) crude oil inventories are anticipated to decrease by 100,000 barrels for the week ending September 13 versus the prior week’s increase of 833,000 barrels. Treasury International Capital (TIC) foreign net transactions and net monthly inflows for July are also scheduled to be released today.
Across the pond, European stocks are mixed in mid-day trading with the final reading for the eurozone’s August Consumer Price Index (CPI) remaining unchanged on an annual basis and being revised slightly downward on a monthly basis. The U.K.’s August CPI increased in line with expectations.
Overnight in Asia, stocks were mixed with Japan’s imports and exports both increasing less than expectations in August as the country’s trade deficit widened less than projections. Indonesia’s central bank unexpectedly decided to reduce interest rates by 25 basis points (0.25%) to 6.00%.
In FOREX trading, the dollar is lower following stronger-than-anticipated U.S. retail sales data leading investors to slightly reduce expectations of a 50 basis point (0.50%) interest rate cut from the Fed meeting concluding today.
Over in the commodity pits, West Texas Intermediate (WTI) crude oil is 1.3% lower at $70.27/barrel despite concerns about escalating violence in the Middle East.
In the metals complex, gold is 0.4% higher at $2578.90/ounce following a weakening dollar.