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Vladimir Zernov
U.S. Stock Market

U.S. Fed Interest Rate Decision In Spotlight

Today, the U.S. Federal Reserve will announce its Interest Rate Decision and provide commentary on the current state of the economy as well as on the central bank’s plans for the future.

This is the first meeting after the adoption of a 2% average inflation target so traders will focus on Fed’s commentary about the potential trajectory of interest rates.

The current market consensus implies that interest rates will stay close to zero for years. However, it is not clear whether the Fed is ready to keep rates at the bottom until the end of 2022 or the end of 2023.

A firm promise to keep the rates near zero until the end of 2022 will not be dovish enough, and the market may find itself under pressure. If the Fed indicates that the rates will stay low until 2024, stocks will get additional support.

S&P 500 futures are gaining ground in premarket trading as investors believe that the Fed will deliver a very dovish message.


Republicans And Democrats Look Ready To Continue Negotiations On The New Coronavirus Aid Package

U.S. House Speaker Nancy Pelosi indicated that Democrats were ready to delay the October recess in order to negotiate a new coronavirus aid bill.

Republicans also signaled that they were ready to deal with a new $1.5 trillion proposal presented by a bipartisan group.

The U.S. economy needs another stimulus package to support consumer activity. In case Democrats and Republicans manage to reach consensus on the new aid bill, the U.S. stock market will get another positive catalyst.

Retail Sales Grow By 0.6% In August

The U.S. has just provided Retail Sales data for August. On a month-over-month basis, Retail Sales increased by 0.6% compared to analyst consensus which called for growth of 1%. Year-over-year, Retail Sales gained 2.6%.

The growth of Retail Sales is slowing down, highlighting the necessity to come up with another coronavirus aid package that will boost consumer spending.

While the Retail Sales data was a bit disappointing, traders will likely stay focused on the upcoming Fed Interest Rate Decision, although the weaker-than-expected report may put some pressure on stocks.

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

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