US Futures Await Fed Decision

US stocks fell into a holding pattern on Wednesday as investors braced for the Federal Reserve’s long-awaited policy decision, with the market still divided on the size of the expected rate cut.

Futures for the Dow Jones Industrial Average (YM=F) and the S&P 500 (ES=F) rose nearly 0.1%, with record highs still within reach after a similarly muted finish on Tuesday. Contracts on the tech-heavy Nasdaq 100 (NQ=F) also added 0.1%.

Stocks ticked over as the market waited to see how aggressive the Fed would be when it made its first US interest rate cut since 2020 at the end of its meeting later on Wednesday.

A significant policy shift is widely expected based on growing signs that the central bank has managed to cool inflation without seriously harming the economy. But investors are still speculating whether hopes for a 0.5% cut will materialize or whether the historic pattern of 0.25% moves will return.

Read More: Fed projections for 2024: What experts say about the possibility of a rate cut

In recent days, traders have stepped up bets on a bigger cut, even after federal officials flagged in September that they were more likely to cut the benchmark rate by 25 basis points. As of Wednesday morning, Fed Funds futures were priced There is a more than 60% chance the Fed will go big, compared to 15% odds a week ago.

Wall Street views stocks, bonds and currency markets as volatile on the immediate effects of the Fed’s decision.

Serious attention is also being paid to the central bank’s new interest rate forecasts, an indication of how many rate cuts officials expect in 2024 and 2025. When the central bank publishes its policy decision it is known as a “dot plot”. 2 pm ET.

Meanwhile, investors absorbed developments in the technology sector. Microsoft ( MSFT ) and BlackRock ( BLK ) have joined forces to raise $30 billion to build AI infrastructure, while Google parent Alphabet ( GOOG ) won a bid to beat a $1.7 billion EU antitrust fine related to digital ads.

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Wednesday, September 18, 2024 at 8:57 am EDT

Housing starts started in August as mortgage rates fell

New residential construction increased in August as mortgage rates continued to decline.

Housing starts rose 9.6% from the previous month to a seasonally adjusted annual pace of 1.356 million units. Census Bureau Published on Wednesday. Single-family home starts rose 15.8% to a seasonally adjusted annual pace of 992,000.

The data comes as homebuilders are more optimistic about the housing market. Mortgage rates are at their lowest level in a year. Rates have been on a downward trend recently, with investors expecting the central bank to announce a rate cut at the end of its policy meeting.

Data on Wednesday showed that building permits for single-family homes rose to a pace of 967,000, up 2.8% from July’s revised figure of 941,000. Meanwhile, multifamily permits came in at a rate of 451,000 in August.
Wednesday, September 18, 2024 at 8:52 am EDT

Dimon says the rate cut debate is overrated

JPMorgan Chase ( JPM ) CEO Jamie Dimon argued in a conference call on Tuesday that any interest rate move by the central bank would not be “earth-shaking.” There is a real economy.”

Comments follow Dimon tells CNBC Last month, when it came to the debate over how much the Fed could cut interest rates, he said, “I don’t think it’s as important as other people think. You know, the rate effect is not that important.”
Wednesday, September 18, 2024 at 8:45 am EDT

A Fed cut of 50 basis points is a real possibility

From Jennifer Schoenberger of Yahoo Finance:

“The Federal Reserve is widely expected to cut interest rates for the first time in four years on Wednesday and outline a path for future rate cuts.

Investors are hoping for a quarter-point cut versus a larger half-percentage-point cut. Traders have increased their bets in recent days on the prospect of a deep 50-basis-point cut by the central bank. On Wednesday morning, Fed Fund futures were priced at more than 60%, down 50 basis points from 15% odds a week ago.

Wilmer Stith, a bond trader at Wilmington Trust, said a 50-basis-point cut by the Fed is a real possibility, and just last week he thought the Fed could cut by 25 basis points. However, he’s on the fence about whether that’s actually happening.

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