Yesterday’s Market Activity
- U.S. stocks inch higher. Major indexes little changed as traders await outcome of Fed meeting. Dow (+0.2) win streak hit eight; S&P 500 Index (+0.1%); Nasdaq (+0.1%).
- Telecom led sectors, helped by a merger announcement; REITs trailed, healthcare also lagged as Obamacare replacement discussions reemerged in the Senate.
- NYSE trading volume below average (96.8%) for second day, breadth was positive (1.1:1).
- U.S. dollar weakness resumed; 10-year Treasury yield +1 basis point (0.01%) to 2.24%.
- Commodities – COMEX gold +0.3% to $1310/oz.; WTI crude oil -0.6% to $49.60/bbl.; industrial metals rose, copper up marginally.
- Trump addresses UN. Speech was much anticipated, but had little market impact. Addressed North Korea (among other troubled nations), trade relations.
Overnight & This Morning
- Global markets in holding patter ahead of Fed. Stocks in Asia were little changed. Nikkei +0.1%; Hang Seng, Shanghai Composite +0.3%.
- European markets slightly lower. STOXX Europe 600 -0.1%, though Spain’s IBEX (-0.9%) underperforms as tensions rise between Spanish government, officials in Catalonia ahead of planned independence referendum.
- Crude oil (+1.1%) continues to rise, now at four-month high at $50.47/bbl.
- U.S. stocks open flat. Treasury yields steady; 10-year note -1 basis point (0.01%) to 2.23%.
- Today’s economic calendar includes August existing home sales, though investors’ focus expected to remain on FOMC and Fed Chair Yellen’s subsequent press conference.
- What to watch for at the Fed meeting. Futures markets are pricing in a ~0% chance of a rate hike after the Federal Reserve (Fed) policy meeting concludes, but there will still be a lot to watch. We will get new economic projections, the projected path of the Fed’s policy rate (the so-called “dot plots“), and a post-meeting press conference starting at 2:30 p.m. ET from Janet Yellen. We’re also expecting the Fed to announce the start of balance sheet normalization. Additional key points we’re watching for include: any decrease in inflation expectations and comments on the economic impact due to Hurricanes Harvey and Irma, which have already increased uncertainty.
- White House eying tax reform changes to shore up support. The Trump administration may be refocusing its efforts in order to shore up Democratic support ahead of next week’s expected release of its proposed tax reform plan. The initial release is expected to provide the broad strokes of the Administration’s plan, rather than fine details, but potential pivots in the still-fluid situation reportedly include leaving the top income tax rate unchanged at 39.6% and abandoning efforts to repeal the estate tax; though Republicans remain committed to initiatives around lowering the corporate tax rate and providing middle-class tax relief.
- Inflation has generally missed expectations, but a pick-up in last week’s reading and data yesterday that showed import prices pushing higher with the weaker dollar has balanced things out some. The inflation data pushed the chances of a rate hike by the end of the year from about 20% to near 50%, according to futures markets.
- More of the same. Equities gained yesterday, but the overall gains were rather small – similar to the action we’ve been seeing all year. In fact, the Dow was higher for the 8th consecutive day and closed at a new all-time high for the 6th consecutive day, though the increases were less than 0.3% each day. You have to go back to 2005 and then 1965 to find similar winning streaks.
- One more look at seasonality. Earlier this week on the LPL Research blog we noted how September historically has been a rough month for equities, but most of the damage tends to take place the second half of the month. Today we will take another look at seasonality, but from a different angle. Be sure to read our blog later today to check it out.
- MBA Mortgage Applications (Sept 15)
- Existing Homes Sales (Aug)
- FOMC Rate Decision
- Yellen (Dove)
- Germany: PPI (Aug)
- UK: Retail Sales (Aug)
- New Zealand: GDP (Q2)
- BOJ: Policy-Balance Rate
- BOJ: Monetary Policy Statement
- Initial Jobless Claims (Spet 16)
- Continuing Claims (Sept 9)
- Philadelphia Fed Manufacturing Index (July)
- FHFA House Price Index (July)
- Leading Economic Indicators (Aug)
- Household Change in Net Worth (Q2)
- Eurozone: Consumer Confidence (Sept)
- Argentina: GDP (Q2)
- BOJ: Kuroda
- ECB Publishes Economic Bulletin
- Japan: All Industry Activity
- Markit US Manufacturing & Services PMI (Sept)
- Williams (Dove)
- George (Dove)
- Kaplan (Hawk)
- France: GDP (Q2)
- France: Markit France
- France: Manufacturing & Services PMI (Sept)
- Germany: Markit Germany
- Germany: Manufacturing & Services PMI (Sept)
- Eurozone: Markit Eurozone
- Canada: CPI (Aug)
Past performance is no guarantee of future results.
The economic forecasts set forth in the presentation may not develop as predicted.
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
Stock investing involves risk including loss of principal.
Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.
Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.
Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards.
Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.
This research material has been prepared by LPL Financial LLC.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.
Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit
Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor
Tracking # 1-646290