The futures markets are well in the green this morning, ahead of the Federal Open Market Committee (FOMC) meeting later today. The market widely expects the Federal Reserve to cut its benchmark interest rate by 25 basis points, to between 4.25% and 4.50% per annum, when the decision is announced this afternoon. However, most traders will be looking toward Chairman Powell’s press conference, which should give additional insight into how the Fed views future interest-rate policy in 2025.
Elsewhere, in economic news, building permits reached an annualized 1,505,000 in November, while new housing starts notched an annualized 1,289,000 for the same period. The level of permits largely beat economists’ expectations, while starts were a bit below the forecasted levels. This news report moved the futures markets very little, suggesting a strong start to the trading day.
Stock market trading started negatively yesterday, with the broader averages declining in the early portion of the session. The averages then largely continued sideways for much of the day before traders bought equities in the final portion of trading. Overall, the S&P 500 declined 23 points (down 0.39%) and the NASDAQ was off 65 points (down 0.32%). Notably, the Dow Jones Industrial Average, which dropped 268 points (down 0.61%), declined for the ninth-straight day, marking the longest streak of losses since 1978, and this was accentuated by underperformance from Dow-30 component UnitedHealth Group (UNH). Overall, market breadth was rather negative, with decliners outpacing advancers by a 2.6-to-1.0 ratio. Most stock market sectors finished in the red, with industrials trading amongst the worst of the lot. Consumer discretionary issues were the only sector to finish in the green.
In commodity news, after an initial decline, oil prices rapidly rebounded following news of a decrease in shipments from Russia, which fell 11% over the last two months. Elsewhere, U.S. Treasury bond yields largely fell throughout the day as traders moved into the safe haven assets. Bitcoin prices declined following a strong advance on Monday, retreating due to profit-taking and overbought conditions. The Chicago Board Options Exchange Volatility Index, or VIX, also known as the fear index rose rapidly as traders bought options protection and priced in greater future price volatility.
Several economic reports will be released in the days ahead, including initial jobless claims, U.S. leading economic indicators for November, and the Philadelphia Fed manufacturing Survey for December on Thursday. On Friday, personal income, the University of Michigan’s Consumer Sentiment Index, and core- and non-core Personal Consumption Expenditures (PCE) Price Indexes from the Bureau of Economic Analysis are on the docket. For today, though, all eyes will be on the Fed’s view for 2025, based on Mr. Powell’s press conference in the afternoon. A few dozen, mostly smaller companies, will report quarterly results in the days ahead. However, the release of data from international shipper FedEx (FDX) will likely be looked at as an indicator of economic activity. – John E. Seibert III
At the time of this article’s writing, the author did not hold positions in any of the companies mentioned.
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