US Stock Market Overview – Stocks Slide but Complacency Remains StapleFOMC meeting minutes show the Fed is on hold
US stocks moved lower on Wednesday as concern that a trade agreement could be put off until 2020 weighed on prices. The major indices closed well of the lows of the trading session. The VIX volatility index started to rise after hitting fresh 2019 lows on Tuesday, which shows the market is very complacent. The Fed said in its latest meeting minutes, that it will likely remain on hold for the foreseeable future and that the hurdle for a cut or hike is high. Most sectors were lower, led down by Materials, while energy shares bucked the trend. Oil prices surged more than 3% helping to buoy energy shares.
A Trade Agreement Could be Punted Until 2020
A trade deal between US and China continues to drive market sentiment. Over the past few days concern that a deal could be put off until next year has been priced into shares. A deal between the US and China will likely require President Trump to agree to roll back some tariffs, which he opposes. China additionally does not want to commit to purchasing nearly double the agricultural products it has bought from the United States. Doubts about a trade agreement have been rising, particularly since the US Senate unanimously voted to support the Hong Kong protesters.
Fed Will Likely Keep Rates Unchanged
The Fed released the minutes of its latest FOMC meeting. The committee has been divided since the summer over how aggressively to reduce rates. Two reserve bank presidents have dissented from every vote this year to lower rates. At that meeting, the Fed kept rates steady after cutting the previous three meetings. Powell has stressed that it would hurdle rate to trigger any change in policy. The Fed basically said that the would-be on hold for a while and essentially are at neutral policy. The minutes said officials didn’t entirely rule out the possibility that the Fed might need to reassess rates in the near future.