US Stock Market Overview – Stocks Rally as Positive Trade News Drives SentimentFed minutes show FOMC is concerned about market expectations
US stocks prices surged higher on Wednesday rebounding from Tuesday drop. The Fed meeting minutes were released on Wednesday, with Some Federal Reserve policymakers expressing concern at their most recent meeting that markets are expecting more rate cuts than the central bank intends to deliver. Prices were buoy as news that China is willing to talk about a possible agreement as long as no more tariffs are imposed by the President Donald Trump administration. Crude oil prices were buoyed by a larger than expected draw in both distillates and gasoline while crude oil inventories rose more than expected. All sectors were higher in the S&P 500 index, led by a rally in technology shares, real-estate was the worst performing sector in an up tape.
The Fed is Concerned About Market Expectations
Federal Reserve members appear concerned that the market expects more rate cuts than voting members are likely to provide. The FOMC approved a 0.25% cut at the Sept. 17-18 meeting, putting the overnight funds rate in a target range of 1.75% to 2%. The meeting minutes show that there are divisions among members about the future path of policy. Minutes reflected those concerns, along with some worry that a market clamoring for easier monetary policy might be getting ahead of itself. The markets are expecting a rate cut in October with futures markets showing that there a 90% chance of a rate cut. Markets also see more reductions on the way in 2020.
The minutes also show that there were some items left out of the statement. The question arose of where the Fed should provide some guidance as to how long the Fed would remain accommodative due to concerns over tariffs.
Will Negotiations Be Fruitful
Several news outlets reported that China is willing to talk about a possible agreement as long as no more tariffs are imposed by the President Donald Trump administration, including planned levies due this month and in December.
Gasoline and Distillates Draw More than expected
The Energy Information Administration reported on Wednesday that US crude oil inventories increased by 2.9 million barrels from the previous week. Gasoline inventories decreased by 1.2 million barrels last week and are about 2% above the five year average for this time of year. Distillate fuel inventories decreased by 3.9 million barrels last week and are about 9% below the five year average for this time of year.