As we approached the opening bell, stock futures were pointing to a positive start to today’s trading. Earlier today, the Census Bureau reported that retail sales for August increased 0.1%. Analysts were calling for a month-over-month drop of 0.2%, versus the 1% increase reported in July (which was revised to 1.1%).
Investors are looking ahead to this week’s Federal Open Market Committee (FOMC) meeting, which concludes on Thursday. While most of Wall Street expects the Federal Reserve to cut its overnight lending rate by at least a quarter percent, expectations have been rising for a greater reduction in light of the weakening job market. Indeed, fed funds futures are now suggesting a 67% probability that the central bank will reduce its rate by half a percentage point. Looking a little further out, the futures are indicating a greater than 90% chance that the target rate will be reduced at least a full percentage point by December, to a range of 4.25%-4.50% or lower. (The current target range stands at 5.25% to 5.50%.)
Also this morning, the Federal Reserve was scheduled to announce industrial production for August, where the Street is calling for an increase of 0.1%, up from a 0.6% decline the month before.
Tomorrow brings the Census Bureau’s report on housing starts for last month. Forecasters are looking for an uptick to 1.310 million units, compared to 1.238 million in July. Meanwhile, building permits (which are more of a forward indicator) are expected to edge up to about 1.410 million, versus 1.406 million the month before.
Thursday brings another update on the residential market with the National Association of Realtors announcing existing home sales for August. The consensus there is that the tally will tick down to 3.89 million units, versus the 3.95 million sold in July. Also on Thursday, the Department of Labor will announce initial jobless claims for last week. Analysts are expecting an increase of about 2,000, to 232,000.
Summing up Monday’s moves for the major indexes, the Dow Jones Industrials advanced 228 points, or 0.6%, to mark a new record high. Meanwhile, the S&P 500 tacked on seven points (0.1%), and the NASDAQ composite fell 91 points (0.5%). – Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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