Market futures are little changed this morning as traders await the conclusion of the Federal Open Market Committee (FOMC) meeting later today. Most traders are expecting the Fed will leave interest rates unchanged later today, but will be looking to see what information can be gleaned about future monetary policy. Most market participants anticipate the central bank will begin to cut rates this year, and expect that this could take place as soon as the June FOMC meeting. The February Consumer Price Index (CPI) data showed that core inflation, a key input to Fed decision-making, has slowed recently. Still, prices remain up 3.8% year over year, which is higher than the Fed’s long-term goals. Additionally, the interest-rate decision will be followed by a press conference, allowing Chairman Powell to give traders further insight into the Fed’s decision-making process. This information has the potential to cause higher volatility in stock prices over the final portion of the trading session.
The stock market rose throughout the trading session yesterday, benefiting from strong housing starts, which jumped 10.7% month over month in February, while building permits increased by 1.9%. Additionally, traders looked ahead to the Fed meeting, bidding up stocks ahead of its decision later today. This caused the S&P 500 to close at an all-time high, while the NASDAQ and Dow Jones Industrial Average were not far off from accomplishing the same feat. Overall, the S&P 500 rose 29 points (up 0.56%), the NASDAQ climbed 63 points (up 0.39%), and the Dow Jones Industrial Average finished higher by 320 points (up 0.83%). Moreover, market breadth was rather robust, as advancers outpaced decliners by a 2.3-to-1.0 ratio. Energy issues were among the best performers, while communication stocks finished barely in the red.
In commodity news, oil prices rose early in the session before giving back a portion of the gains, as traders saw an improving demand outlook for China, a decline in inventories in the United States, and the effects of attacks on Russian refining facilities due to the war in Ukraine.
Elsewhere, U.S. Treasury Bond yields were lower across the board as traders moved into these haven assets. The Chicago Board Options Exchange Volatility Index was lower as demand for options protection fell a bit.
Additionally, Bitcoin futures experienced a flash crash yesterday on the crypto exchange BitMEX, falling from a high of $68,000 to as low as $8,900 before recovering a significant portion of the day’s losses. That cryptocurrency fell to around $60,000 on other exchanges before bouncing back a bit. This wild action dragged lower shares of cryptocurrency exchanges, such as Coinbase Global (COIN). Still, Bitcoin remains off of all-time highs made following the approval of ETFs that allow for more access for investors.
Several economic reports will be released in the coming days. These include initial jobless claims, the Philadelphia Fed Manufacturing Survey, and the S&P Flash Services Purchasing Managers Index for March on Thursday. On Friday, Fed Chair Powell will take part in a Fed Listens event, which should allow him to qualify further any statements made about future interest rate policy later today. On the earnings front, package-transporter FedEx (FDX) will report on Thursday after the close. - 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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