Markets opened higher. US equities have continued their recent strength this week on the heels of the first two-week losing streak in nearly five months. Today the big news is the Federal Reserve (Fed) meeting, as all eyes will be focused on future policy (more below). Japan finished higher, while China and Hong Kong ended slightly lower. European markets are mixed through midday trading.
It’s Fed day. The Fed ends its two-day policy meeting today with its decision on interest rates due at 2 p.m. ET followed by a press conference with Fed Chair Jerome Powell. It is widely presumed the Fed will leave rates at zero, but we will receive an updated projection on when other Fed members expect to see higher rates, known as the “dot plot.” Last month the Fed left the door open for hotter inflation before hiking rates. How much inflation will it take before the Fed hikes again?
Retail sales missed expectations. August sales rose 0.6% month over month versus Bloomberg’s consensus expectations for a 1% increase. This followed July’s downwardly revised 0.9% advance. The control group, excluding building materials, autos, and gas, fell 0.1% and also missed estimates (source: US Census Bureau ). The July 31 expiration of supplemental jobless benefits provided a headwind. Though the shortfall is disappointing during the important back-to-school shopping season, keep in mind that retail sales have recovered to pre-pandemic levels in just five months, compared to 40 months during the 2008–09 financial crisis. Read more on this important report in today’s LPL Research blog.
100 days. The S&P 500 Index has officially closed above its 50-day moving average 100 trading days in a row. The index has bounced off this trend line so far this week, making it one of the longest streaks above this trend line ever. In fact, the S&P 500 has made it to at least 100 consecutive trading days only 15 other times (257 in the mid 1990s is the record). This is another way of showing how persistent this bull market has been.
The correction continues. In this week’s Market Signals video, LPL Financial Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder discuss the recent two-week losing streak for stocks, the fastest correction ever for the NASDAQ, Cincinnati Bengals, sentiment, and election polls. Watch the video in today’s LPL Research blog.
Technical update. US stocks moved slightly higher Tuesday, with the Nasdaq’s 1.2% gain leading the way. The S&P 500 pushed up 0.5% to close at 3401, while small caps and the Dow Jones Industrial lagged, both closing near flat. Markets are higher again today in early trading, with crude oil prices up nearly 2.2% and pushing back near $40 per barrel. First resistance for the S&P 500 comes at the September 2 highs near 3580.
COVID-19 news. The recent improvement in new daily cases has started to level off, with the seven-day average of new cases up to 37,000 following Tuesday’s 39,456 case count (source: COVID Tracking Project). Hospitalizations rose to a one-week high of 1,491. Continued rising cases in Spain and France and higher positive test rates offer a reminder that the global threat remains. House Speaker Nancy Pelosi suggested postponing the October recess to strike a new pandemic relief bill.
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- LPL Financial Equity Strategist Jeff Buchbinder was quoted recently on CNBC.
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