US Stock Market Overview – Stocks Rise, Led by Real-Estate, Energy Bucks the Trend

The Fed is on deck
David Becker
U.S. Equity Indexes

US stocks prices were higher on Tuesday rebounding as crude moved lower after Saudi Arabia assured the markets that they would be completely back online by September 30. Trader’s now await the Federal Reserve decision on Wednesday. Expectations are that the Fed will reduce interest rates by 25-basis points. This comes as manufacturing rose according to the Fed. Inflation remains subdued and the retail investors is strong, which has led many economists to say that the Fed should stand pat. Currently there is only a 3% chance that the Fed will keep rates unchanged. Sectors were mixed, led higher by Real-estate, while Energy shares bucked the trend.

The Fed Takes Center Stage

There are many reasons why the Fed should stand pat, but the consensus is that they will cut rates by 25-basis points. The drama is centered on just how strongly the Fed will signal that it’s going to cut rates again by the end of 2019. It’s the statement that will determine whether the Fed meets market expectations. The market is looking for more cuts during the balance of 2019, and if that does not come through via Fed Chair Powell’s commentary following the Fed decision the markets are likely to sell off.

The Fed faces many challenges. President Donald Trump continues to hammer away at the Fed looking for them to reduce rates down to zero, buoying the stock market and raising the chance that he will be reelected.

Manufacturing Rises

The Fed announced that manufacturing production rose 0.6% last month after an unrevised 0.4% drop in July. Expectations were for manufacturing output to rise by 0.2% in August. Production at factories fell 0.4% in August on a year over yea5r. Manufacturing, which accounts for about 11% of the U.S. economy, is being hobbled by a year-old trade war between the United States and China and slowing global economic growth. The trade war has eroded business confidence. Its unlikely that a trade agreement will be mediated in October, which is likely to keep gold prices buoyed.

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