NASDAQ 100, Dow Jones, S&P 500 News: Ticking Higher Following Tech Tumble Amid Fed Speculations

Highlights

• Investors eye Federal Reserve’s impending policy move with heightened anticipation.
• Treasury yields rise, sparking intensified focus on the Federal Reserve’s upcoming meeting.
• With a near 100% probability, market expects Fed to maintain interest rates.
• Detroit’s UAW strike might significantly influence upward price trends.

Fed’s Upcoming Decision Sets the Stage

U.S. stock futures showed a positive uptick Monday morning as investors eagerly anticipate the Federal Reserve’s forthcoming policy move. Dow Jones Industrial Average futures added a subtle increase of 23 points, or 0.07%, while the S&P 500 and Nasdaq 100 futures both moved upwards by 0.09% and 0.13% respectively. Contrastingly, both the S&P 500 and the Nasdaq concluded the previous week with losses. The Dow, however, noted a minor 0.1% gain to conclude the week.

Tech Takes a Tumble

The technology sector, represented by the Technology Select Sector SPDR Fund, witnessed a significant decline by 2.2% for the week ending Sept. 15. Oracle’s disappointing revenue results for the fiscal first quarter led the descent, with a near 10% drop. Concurrently, KLA Corporation and Monolithic Power Systems also reported significant downturns. In contrast, the utilities sector, represented by the Utilities Select Sector SPDR Fund, showcased the week’s most significant growth, boasting an increment of 2.8%.

Treasury Yields and the Fed’s Impending Move

As U.S. Treasury yields rose, investors’ gaze turned to the imminent Federal Reserve meeting, speculated to shed light on potential interest rate fluctuations in the foreseeable future.

Although current market speculations, backed by CME’s FedWatch tool, suggest a 99% likelihood of unchanged rates post the Fed meeting, the prospect of a rate hike later in the year remains a contentious topic among Fed officials. Inflation data, particularly recent releases like the consumer price index and producer price index for August, will significantly influence this decision-making process.

Inflation Insight and Market Predictions

A recent consumer sentiment report by the University of Michigan indicated diminishing inflation expectations. Furthermore, data slated for release prior to the Fed’s rate decision, such as the Housing Market Index and housing-related statistics, are anticipated to hold investors’ attention.

The predominant expectation leans towards the Fed maintaining the current interest rate. However, the central bank’s approach and perspective on inflation will remain under the microscope. Current market predictions, based on the CME Group’s FedWatch tool, denote nearly 100% probability of a steady rate and a 31% chance of a rate hike by November.

Labor Market’s Implication on Prices

While recent inflation indicators align with economists’ forecasts, the labor market’s strength might herald increased prices. The ongoing United Auto Workers strike in Detroit might exert further upward pressure on prices.

As labor negotiations progress successfully, policymakers are wary of the consequent surge in prices, a challenge the FOMC will need to address in its future decisions.

Economic releases by the National Association of Home Builders and the New York Fed are imminent and will be keenly observed by policymakers.

Short-Term Outlook – Fed Dependent

Amid mixed market sentiments, the prevailing expectation leans towards the Fed maintaining steady interest rates. However, given recent inflation data and the strength of the labor market, traders and investors will be keenly observing any nuances in the Fed’s commentary for insights into rate adjustments in the coming months.