Stocks Set To Open Higher As Traders Bet On A Dovish Fed

Traders Wait For U.S. Fed Interest Rate Decision

S&P 500 futures are gaining ground in premarket trading while traders wait for U.S. Fed Interest Rate Decision and the subsequent commentary.

The Fed is expected to leave the rate unchanged as it has no plans to push the rate into the negative territory. Many observers expect that the Fed will expand its asset purchase program in order to put pressure on yields of longer-dated bonds. Such a move will be bullish for stocks.

Traders also wait for the results of ongoing stimulus negotiations. Recent reports suggest that Republicans and Democrats are moving closer to a compromise deal, but it remains to be seen whether this deal will be reached before Christmas.

Stimulus hopes put pressure on U.S. dollar which moved to yearly lows against a broad basket of currencies. Weaker dollar is bullish for precious metals like gold and silver which are moving higher today, and miners’ stocks may get a boost during today’s trading session.

Flash PMI Numbers In Focus

U.S. will soon release flash PMI reports for December. Manufacturing PMI is expected to decrease from 56.7 in November to 55.7 in December while Services PMI is projected to decline from 58.4 to 55.9.

PMI reports from other countries were better than expected and provided support to global markets. Euro Area Manufacturing PMI increased from 53.8 to 55.5 compared to analyst consensus of 53. Surprisingly, Euro Area Services PMI grew from 41.7 to 47.3 compared to analyst consensus of 41.9.

While numbers below 50 show contraction, the rebound of the Euro Area services segment was strong before new virus-related restrictions were announced in Europe.

In the UK, Manufacturing PMI grew from 55.6 to 57.3 while Services PMI increased from 47.6 to 49.9 as firms adapted to new business realities.

Retail Sales Declined By 1.1% In November

The U.S. has just released Retail Sales data for November. On a month-over-month basis, Retail Sales declined by 1.1% while analysts expected that they would decrease by just 0.3%.

Excluding Autos, Retail Sales fell by 0.9%. On a year-over-year basis, Retail Sales increased by 4.1%.

It looks like the second wave of the virus has started to put real pressure on consumer activity so U.S. lawmakers will have to deliver a new round of stimulus as soon as possible to support the economy.

For a look at all of today’s economic events, check out our economic calendar.