Fed Pauses but Signals Higher for Longer – Sep 22 Market Recap
Indices
- Dow 33,963, -655 or -1.89%.
- Nasdaq 13,211, -497 or -3.63%.
- MSCI EAFE 2,064.70, -43.52 or -2.06%.
- S&P 4,320, -130 or -2.92%.
- USD10Y 4.438%, +11.6bp or +2.68%.
- WTI Crude $90.35/bbl, -$0.85 or -0.93%.
Fed Pauses but Signals Higher for Longer
The week was dominated not by the Fed’s interest rate decision (no rate hike) but by Fed Powell’s subsequent statement and press conference which signaled that while the Fed only predicts one more hike, they now only forecast two rate cuts in 2024 vs four cuts previously predicted. Markets sold off on news with the tech heavy Nasdaq fairing the worst of the indices.
Some good news on the labor front: at the time of this writing, news outlets are reporting that the writer’s union and Hollywood studios have reached a tentative agreement to end their 146-day strike.
Next Week
The coming week has a few earnings releases of note in Costco, Nike, and Carnival Cruises. With regard to economic data, August Durable Goods orders are published on Wednesday, the second revision of Q2 GDP on Thursday, and the Fed’s preferred measure of inflation, the Personal Consumption Expenditure is published on Friday.
Economic Calendar
- Monday – N/A.
- Tuesday – September Consumer Confidence. Earnings: Costco Wholesale (COST).
- Wednesday – August Durable Goods Orders.
- Thursday – Initial Jobless Claims, Q2 GDP Revision. Earnings: Nike (NKE).
- Friday – August Personal Consumption Expenditure. Earnings: Carnival Cruises (CCL).
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Sep 22 Daily Trading Recap…
Monday – Dow +5 to 34,623, Nasdaq +2 to 13,710, S&P +24 to 4,474, USD10Y -0.3bp to 4.319%.
Tuesday – Dow -106 to 34,517, Nasdaq -32 to 13,678, S&P -9 to 4,443, USD10Y +4.6bp to 4.365%.
- Nine of eleven S&P sectors traded down, led lower by Energy, Consumer Discretionary, and Real Estate.
Wednesday – Dow -76 to 34,440, Nasdaq -209 to 13,469, S&P -41 to 4,402, USD10Y -1.6bp to 4.349%
- Seven of eleven S&P sectors traded down, led lower by Communication Services, Technology, and Consumer Discretionary.
- As expected, the Federal Reserve Open Market Committee paused and kept rates at their current 5.25% – 5.50% target. Their statement noted that the economy is expanding at a solid pace with slowing but still strong job growth.
- Markets sold off as the Fed’s dot plot chart indicated an additional rate hike this year but only two rate cuts next year when previously it had indicated four rate cuts.
- FedEx (FDX) blew out their earnings estimates, but revenues were merely in line with expectations; FDX traded up +5.77% post-close.
Thursday – Dow -371 to 34,069, Nasdaq –246 to 13,223, S&P -72 to 4,330, USD10Y +13.1bp to 4.48%.
- Jobless claims fell to 201,000 vs the 225,000 forecast and last week’s slightly revised higher print of 221,000 (originally 220,000).
- September Philadelphia Federal Manufacturing Index was horrid at –13.5 vs expectations of 0 and vs last month’s +12 print.
Friday – Dow -106 to 33,963, Nasdaq -12 to 13,211, S&P -10 to 4,320, USD10Y -4.2bp to 4.438%.
- Nine of eleven S&P sectors traded down, led lower by Consumer Discretionary, Financials and Real Estate.
- September Flash U.S. S&P Services PMI missed expectations at 50.2 vs 50.7 and vs last month’s 50.5 print.
- September Flash U.S. S&P Manufacturing PMI was slightly better at 48.9 vs 48.3 expected and vs last month’s 47.9 print.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
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