Market Update: Wed, Sep 18, 2019 | LPL Financial Research

Daily Insights

Fed decision today. The S&P 500 Index set to open relatively flat ahead of the Federal Reserve (Fed) rate decision. The Fed is expected to announce that it is cutting its policy rate by 25 basis points (0.25%) this afternoon at 2 p.m. ET. After the release of the policy statement, Fed Chair Powell will hold a press conference with Q&A at 2:30 p.m. ET. There were two dissenters when the Fed cut rates six weeks ago, and with better U.S economic data, higher inflation, and a strong consumer, all eyes will be on how unified the Fed is regarding future cuts. We continue to expect a 0.25% cut today and likely one more 0.25% cut later this year. We previewed the Federal Open Market Committee’s September meeting here and will have another blog on the LPL Research blog after the decision this afternoon.

Crude settles lower after massive spike. A day after the Saudi oil facilities attacks saw West Texas Intermediate (WTI) crude oil spike 14.7% (the third largest one-day gain ever), WTI fell back 5.7% Tuesday. Saudi Oil Minister Abdulaziz said he expected oil supply to be fully back on line by the end of September. Crude oil is down again slightly this morning, although multiple Saudi officials have since said that total oil restoration will take longer than the oil minister outlined.

Industrial production beats estimates. U.S. industrial production grew at 0.4% year over year but rose 0.6% month over month in August, beating estimates of 0.2%, and bouncing back from a -0.1% month-over-month decrease in July. Manufacturing remains under pressure, but the positive month-over-month rebound shows modest signs of an attempt to stabilize following some positive geopolitical news recently. A U.S.-China trade deal could ease global tensions and have a positive impact on industrial production, but economic damage clearly has been inflicted worldwide, and the global economy may take some time to recover.

 

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