Stocks started the week with modest gains, breaking a four-session losing streak. However, this morning’s futures are pointing to negative opens for the major U.S. indexes. In overnight trading, markets in Asia were down. Meanwhile, the major European indexes are mostly trading in the red. Elsewhere, oil prices have edged lower, with West Texas Intermediate down about 0.5%, to around $89.20 a barrel.
Last week, the Federal Reserve gave investors some sobering news. Although the central bank paused on raising the fed funds overnight rate, as was widely expected, it did forecast that there would be one more rate hike before the year was over. (This contrasts with the Wall Street consensus, which has been an expectation of no increases at the Fed’s next three meetings.) Also, Fed officials continued to project that borrowing costs would remain higher for a longer time than anticipated, as Chair Jerome Powell noted that the lead bank needs to see more evidence that inflation is under control. Furthermore, members are forecasting two rate cuts in 2024, for a probable total of 50 basis points versus their original estimate of four.
As it stands, equities remain on track to show a loss in September, in keeping with its historical record of being the worst month of the year for stocks. Moreover, with Washington lawmakers once again heading to a potential government shutdown if a new spending bill isn’t agreed upon, a lack of progress there may further weigh on market sentiment.
On the economic front, later today we’ll get the tallies for August new home sales. Estimates are calling for 700,000 versus 714,000 the month before. Tomorrow, the Census Bureau is scheduled to report durable goods orders for August. There, the Street is calling for dip of around 0.4%, which would be a solid improvement compared to the 5.2% decline registered for July.
Thursday brings the revised GDP (Gross Domestic Product) figures for the second quarter, which are estimated to come in at around 2.0%. Also due are pending home sales for last month, which are widely expected to show a dip of about 1%, versus the 0.9% increase posted in July. Finally, the week wraps up with the Personal Consumption Expenditures Price Index (PCE) for August on Friday, which is expected to show a year-over-year increase of about 3.5%, up from July’s reading of 3.3%.
Summing up Monday’s market action, the Dow Jones Industrials gained 43 points or 0.1%, the S&P 500 moved ahead 17 points (0.4%), and the tech-focused NASDAQ was up 59 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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