It’s finally here. The Federal Reserve is scheduled to meet on Tuesday and Wednesday, and is widely expected to cut interest rates for the first time since starting to raise rates in March 2022. Now it’s 5.25% to 5.5%. It was a long-awaited meeting for investors, who hope the start of easy monetary policy will boost earnings growth for companies that have been battling rising inflation and rising borrowing costs, especially those that are interest-rate sensitive. . But recent signs of slowing economic growth have investors worried that the Fed may be forced to cut interest rates for the wrong reasons, a concern that casts a pall over the central bank meeting – especially as the S&P 500 approaches a record high again occasion. Binky Chadha, chief U.S. equity and global strategist at Deutsche Bank, said: “To the extent that we cut interest rates… because deflation is going well, or maybe a little better than expected, that could be very positive for stocks.” On Thursday, CNBC’s “The Exchange” programme. “But if you cut rates because you’re worried about growth, that’s very bad for stocks.” In fact, stocks were set to rise in the week leading up to the meeting. The Dow Jones Industrial Average rose about 2% and the S&P 500 rose more than 4%. The Nasdaq rose more than 6%. 25 or 50 basis points? On Friday, the CME Group’s Federal Reserve Watch tool showed that the market was divided on the extent of the rate cut. About 53% of traders expected a rate cut of 25 basis points, while the remaining 47% expected a larger cut of 50 basis points. “If they cut rates by 50%, that tells me the Fed is actually more worried about the economy going into recession than making sure that inflation stays on its current downward trajectory,” said Chief Economist Dave Sekera )express. Market Strategist at Morningstar. “So if there was a 50 basis point cut, I think the market would actually sell off on that news.” Investors will also be watching to see what signals Fed policymakers will send in their summary of economic forecasts regarding future policy measures. . FedWatch shows that the market currently expects the federal funds rate to fall by 1.25 percentage points by the end of 2024 to a range of 4%-4.25%. S&P near record: Buy the rumor, sell the news? Toggle AI co-founder and president Giuseppe Sette worried about overvaluation as the stock price rose before the meeting. He worries that stocks will rise ahead of the central bank meeting and investors may sell off after the news is released. “I think we’re basically experiencing the peak of this cycle. There’s going to be another test of that peak next week, and I expect that this test will fail and we’ll retest it,” Sette said. BTIG’s Jonathan Krinsky noted that the S&P 500 could hit a new all-time high next week as it’s within 1% of July’s record. He said the development would make post-Fed stock market strategies “even trickier” for investors. Still, Morningstar’s Sekera said he recommends investors focus more on value stocks rather than growth stocks. He also sees small-cap stocks as buying opportunities, while remaining underweight large-cap stocks. Some individual sectors that appear attractive to strategists include communications and energy. Bill Northey of U.S. Bank Asset Management Group took a more cautious approach. His firm downgraded U.S. large-cap stocks. The firm’s core fixed income allocation was also raised to neutral from a previous underweight. Separately, August retail sales data released on Tuesday are expected to show that consumer spending last month was essentially unchanged from the previous month’s 1% increase, according to FactSet consensus forecasts. Notable earnings reports next week include food company General Mills and Olive Garden owner Darden Restaurants. Quarterly reports from homebuilder Lennar and shipping company FedEx will provide further insight into the economy. One week ahead calendar all times are Eastern Time. Monday, September 16 8:30 AM Empire State Index (September) Tuesday, September 17 8:30 AM Retail Sales (August) 9:15 AM Capacity Utilization (August) 9:15 AM Industrial Production (August) August) 9:15 a.m. Manufacturing production (August) 10 a.m. Business inventories (July) 10 a.m. NAHB Housing Market Index (September) Wednesday, Sept. 18 8:30 a.m. Preliminary building permit data (August) ) 8:30 AM Housing Starts (August) 2 PM FOMC Meeting 2 PM Fed Funds Target Earnings Cap: General Mills Thursday, September 19 8:30 AM Current Account (Q2) 8:30 AM Continued Unemployment Claims Jobless Claims (09/07) 8:30 AM Initial Jobless Claims (09/14) 8:30 AM Philadelphia Fed Index (September) 10 AM Existing Home Sales (August) 10 AM Leading Indicators (8 Month) Earnings: Lennar, FedEx, Darden Restaurants Friday, September 20
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