Stocks Remain Calm Before Federal Reserve Meeting: Daily Stock Market Update
In the lead-up to the highly anticipated Federal Open Market Committee (FOMC) meeting, several significant developments have unfolded across the economic landscape.
The consumer sector continues to drive the economy forward, according to Comerica Bank Chief Economist Bill Adams. Sales for online businesses, clothing, and school supplies have been excellent, signifying robust consumer confidence.
Meanwhile, the housing market remains soft, with 39% of builders reporting price cuts in September, marking the highest level in the post-COVID period. The NAHB Housing Market Index remained unchanged at 32 for the month, below the forecast for an uptick to 33.
In the stock market today, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all experienced minor declines at the closing bell on Fed Day Eve. The Dow Jones Industrial Average was down 0.3%, the Nasdaq Composite was off 0.1%, and the S&P 500 had slipped 0.1%.
However, one notable exception was GE Aerospace (GE), which hit a new all-time high. The stock traded as high as $294.74, surpassing the intraday peak at $289.94 it reached on August 28, 2000, and the all-time closing high of $287.55 set on the same day. Morgan Stanley analyst David Arcaro reiterated his Overweight (or Buy) rating and a 12-month target price of $675 for GE stock, citing a healthy backdrop for the gas turbine market and multiple upside opportunities in Electrification for GE Aerospace.
The three-way separation of General Electric was completed in April 2024, forming GE Aerospace, GE Vernova, and GE HealthCare Technologies. Stephen Miran has been confirmed to replace former Fed Governor Adriana Kugler on the central bank's board.
The current FOMC meeting is unfolding during an extraordinary political moment, as noted by Nick Timiraos of The Wall Street Journal. The probability of a rate cut is 100%, according to CME FedWatch. The federal funds rate is expected to be lowered from its current range of 4.25% to 4.50%.
The outcome of the FOMC meeting is considered to be 'one of the strangest in years', with the meeting being overshadowed by political tensions and recent personnel changes at the Fed. Fed Governor Lisa Cook, the first Black woman to serve on the Federal Reserve Board, has secured her position despite former President Trump's efforts to remove her based on allegations of mortgage fraud. The U.S. Court of Appeals for the D.C. Circuit upheld an injunction imposed by a lower court on President Trump, allowing Cook to retain her position and serve a full 14-year term on the Board.
Retail sales increased by 0.6% month over month in August, well above the forecast of 0.2%, and expanded by 5.0% year over year. However, weak grocery sales in August may indicate that lower and middle-income consumers are retrenching, while affluent consumers are in better shape and likely fueled the outperformance of overall retail sales.
As the FOMC meeting continues, investors and economists eagerly await the decision due at 2 pm Eastern Standard Time and a press conference by Fed Chair Jerome Powell at 2:30 pm on Wednesday. The decisions made during this meeting will undoubtedly have significant implications for the economy and the stock market in the coming months.
