The futures are in the green this morning following a weak day of trading in the broader market yesterday. Traders are awaiting more information from the latest Federal Open Market Committee (FOMC) meeting, due later this afternoon. The Federal Reserve will announce its interest-rate policy decision at 2 p.m., and most expect that the target interest rate will be held between 4.25% and 4.50%. Market participants will likely be more interested in the path of future interest rates, as they are currently pricing in two cuts over the remainder of 2025. However, that could potentially change when Federal Reserve Chairman Jerome Powell gives his remarks on the broader economy. Overall, we think the market will start positively, but the outcome of this event will have a significant impact on trading results in the days ahead.
The market dropped rapidly in the early portion of the trading session yesterday, following two days of positive price action. The major indices then generally drifted sideways through much of the day, making little upward progress following the initial drop. Overall, the S&P 500 declined 60 points (down 1.07%), the NASDAQ fell 305 points (down 1.71%), and the Dow Jones Industrial Average was off 260 points (down 0.62%). Moreover, market breadth was rather negative, with decliners outpacing advancers by a 1.8-to-1.0 ratio. Energy stocks were among the best performers on the day, while consumer discretionary were among the weakest performers.
In commodity news, oil prices generally fell yesterday alongside the broader market, despite an increase in geopolitical tensions later in the day, as a breakdown of the Israel-Gaza ceasefire occurred. Elsewhere, U.S. Treasury bond yields were largely flat, though long-term rates fell in the early portion of the trading before recovering some. The Chicago Board Options Exchange Volatility Index, or VIX, commonly known as the fear index, rose yesterday, as traders demanded more options protection.
A few economic reports are slated for release in the days ahead. These include initial jobless claims, the Philadelphia Fed manufacturing survey, and existing home sales on Thursday. On the earnings front, a few dozen companies will report quarterly results in the day ahead, though we are well past the apex of earnings season. Overall, we think trading in the days ahead will be impacted by changes in sentiment regarding future interest-rate policy. - John E. Seibert III
At the time of this article’s writing, the author held positions in none of the companies mentioned.
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