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Daily Markets: Markets Wait for Fed’s Rate Decision and Powell’s Speech

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Today’s Big Picture

Asia-Pacific equity indexes ended today’s session down across the board. China’s Shanghai Composite dropped 0.17%, India’s Sensex fell 0.44%, and Taiwan’s TAIEX and South Korea’s KOSPI declined 0.86% and 0.87%, respectively. Japan’s Nikkei dropped 1.36%, Australia’s ASX All Ordinaries closed 1.54% lower and Hong Kong’s Hang Seng led the way, down 1.79% on broad Technology weakness. By mid-day trading, major European equity indices are up, and US futures point to a mildly positive open later this morning.  

How equities end today will probably hinge on not just this afternoon’s interest rate decision by the Federal Reserve, but its posture on what lies ahead in its fight to tame inflation and how that squares with the Fed’s latest Economic Projections update for the rest of this year through the end of 2024. Fed officials have been stating plainly to the market that it will continue its fight until the job is done.

Odds are the Fed will reaffirm that its path will not be a short one and the likelihood is that the Fed Funds rate will remain at elevated levels for some time given the Fed’s 2% inflation target. In recent weeks, Fed Chair Powell has stated there could be “some pain to households and businesses” amid the Fed’s fight, and during his post-FOMC meeting presser, market watchers will be looking to see if Powell’s wording suggests the Fed is willing to tolerate more pain on its inflation fighting quest. If so, that could roil the markets, renew recession concerns and lead to more aggressive re-thinking on prospects for GDP and corporate earnings. 

Data Download

International Economy

According to the latest monthly CBI Industrial Trends Survey, the Confederation of British Industry’s order book balance rose to -2 in September, up 5 points from the previous month’s figure of -7 and above market expectations of -11. 

Russian President Vladimir Putin announced a “partial mobilization” of the population to bolster flagging manpower for Russia’s “special military operation.” While only reservists will be conscripted, the Defense Ministry later clarified that as many as 300,000 troops could be called up. In response, oil and natural gas prices are trading higher this morning in response to the potential for renewed supply shocks. As a reminder, European Union sanctions banning seaborne imports of Russian crude will come into force on December 5 and OPEC continues to deliver below its stated production targets. 

Domestic Economy

In addition to the Federal Reserve’s monetary policy statement, updated Economic Forecast, and Fed Chair Powell’s press release, a series of events that kick off at 2 PM ET today, we also have the usual weekly data for MBA Mortgage Applications and EIA Crude Oil Inventories. At 10 AM ET, the August Existing Home Sales data will be published, and expectations are looking for 4.7 million units down from 4.8 million in July.  

President Biden will address United Nations General Assembly today at 10:35 AM ET. 

Markets

Equities traded off yesterday as markets approached mid-June lows in advance of today’s Fed meeting with the Nasdaq Composite down 0.95%, the Dow off 1.01%, the S&P 500 1.13% lower, and small caps closing down as the Russell 2000 lost 1.40%. Individual standouts yesterday included Apple (AAPL) gaining 1.57% on iPhone 14 sales projections and AutoZone (AZO) up 1.62% on a strong quarter and analysts’ upward price target revisions. Here’s how the major market indicators stack up year-to-date:

  • Dow Jones Industrial Average: -15.50%
  • S&P 500: -19.10%
  • Nasdaq Composite: -26.97% 
  • Russell 2000: -20.39%
  • Bitcoin (BTC-USD): -59.32%
  • Ether (ETH-USD): -64.12%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, General Mills (GISwill be among the companies issuing their latest quarterly results and guidance. 

In addition to other topics, Citigroup (C) CEO Jane Fraser is expected to discuss the importance of data security and privacy as well as emerging technologies in her testimony before the House Committee on Financial Services. Bank of America (BAC) CEO Brian Moynihan is set to discuss the company’s involvement in digital investments and cryptocurrency research. Fraser and Moynihan join a bevy of other bank CEOs testifying in front of the committee starting at 10 AM ET. 

International Game Technology’s (IGT) IGT Global Solutions was selected by Ontario Lottery and Gaming as the primary technology provider of self-serve lottery terminals.

In response to the energy crisis in Europe, Uniper (UNPPY) Germany’s largest importer of gas, is being nationalized by the government.

The Wall Street Journal reports Boeing (BA) intends to cut roughly 150 finance jobs in the U.S. as part of efforts to simplify its corporate structure.

Shares of British software company Aveva Group (AVEVF) were moving higher this morning after Schneider Electric (SBGSF) said it would proceed with a full takeover of the company. 

IPOs

Shares of Biotech firm Jupiter Neurosciences (JUNS) are expected to start trading later today and immune therapeutics developer Alopexx (ALPX) is expected to start trading on September 22. 

Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

KB Home (KBH), Lennar (LEN),= and Steelcase (SCS) are expected to report quarterly results after equities stop trading today. As we approach the end of the quarter, readers should be on the watch for earnings pre-announcements both positive as well as negative. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar

On the Horizon

Thursday, September 22

  • Japan: Bank of Japan Interest Rate Decision
  • UK: Bank of England Monetary Policy Meeting
  • Eurozone: Consumer Confidence – September
  • US: Weekly Initial & Continuing Jobless Claims, Weekly EIA Natural Gas Inventories

Friday, September 23

  • Eurozone: S&P Global Flash Manufacturing & Services PMIs – September
  • US: S&P Global Flash Manufacturing & Services PMIs – September

Thought for the Day

“Somebody who can reckon with the past, who can live with the past in the present, and move towards the future—that’s fabulous.” ~ Bruce Springsteen

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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