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NASDAQ 100, Dow Jones, S&P 500 News: Investors Jittery Ahead of Fed Decision on Rates

By:
James Hyerczyk
Published: Sep 18, 2023, 14:11 GMT+00:00

Traders eagerly await the Fed's stance on inflation and rate adjustments, influencing the S&P 500 and Dow Jones Industrial Average's trajectories.

S&P 500, Dow Jones, Nasdaq-100

In this article:

Highlights

  • U.S. indices danced Monday, with S&P 500 and Nasdaq showing minor declines while Dow Jones edged up.
  • Investors fixate on the Federal Reserve meeting, keen for hints on interest rate trajectories.
  • With inflation at the core, the Fed faces a pivotal decision that could set the tone for 2023.
  • Market gurus are tracking key stocks: DoorDash rises, Micron shines, while Arm Holdings and PayPal slip.

Markets Eye Federal Reserve Amid Mixed Market Moves

U.S. indices showed varied movements on Monday, with the S&P 500 dipping a marginal 0.1% and the Nasdaq Composite retracting 0.2%. Conversely, the Dow Jones Industrial Average nudged upwards, gaining 19 points. The market’s attention was primarily centered on the Federal Reserve’s imminent policy decision.

Surging Crude Prices and U.S. Treasury Yields

West Texas Intermediate and Brent crude prices experienced a significant surge, reaching levels unseen since the previous November. WTI has risen nearly 30% this quarter, making it the most substantial increase since Q1 2022. Meanwhile, U.S. Treasury yields saw a spike as investors eagerly anticipate insights from the Federal Reserve’s upcoming meeting. This could offer hints about potential shifts in interest rates in the subsequent months.

With the Federal Reserve meeting on the horizon, markets project a 99% likelihood that interest rates will remain static, as indicated by the CME’s FedWatch tool. Notwithstanding, a rate hike later this year hasn’t been entirely ruled out by Fed officials. Recent data, particularly inflation metrics, has been a focal point in their deliberations.

August’s consumer and producer price indices suggest a potential tempering of inflationary pressures, particularly when volatile components like food and energy are excluded. Notably, the University of Michigan’s recent consumer sentiment report signaled a notable downturn in inflation expectations.

Key Stocks on the Move

DoorDash: Shares grew by 1.6% following an upgrade from Mizuho Securities. The firm cited robust market share and increased consumer food spending as factors potentially pushing the delivery company to exceed projections in the latter half of the year.

Micron Technology: The memory and storage solutions giant saw over 2% growth in premarket trading, driven by Deutsche Bank’s upgrade and an optimistic outlook on the company’s semiconductor pricing power.

Arm Holdings: The newly-public semiconductor firm’s shares retracted 3.7% in premarket trading, with Bernstein launching coverage with an underperform rating.

PayPal: Shares declined over 1% after a downgrade by MoffettNathanson, expressing concerns about the potential challenges awaiting PayPal’s soon-to-be CEO, Alex Chriss.

Short-term Forecast – Fed Dependent

The central theme in the coming days for traders and investors alike will be the Federal Reserve’s stance on inflation and rate decisions. The overarching sentiment leans towards the Fed maintaining the current interest rate.

However, the tone – dovish or hawkish – will be pivotal in setting expectations for November and December. Recent inflation figures have mostly aligned with economists’ predictions, but any unexpected changes might stir the waters in financial markets.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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