The S&P 500 Index ($SPX) (SPY) today is up by +0.05%, the Dow Jones Industrials Index ($DOWI) (DIA) is down by -0.11%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up by +0.11%.
Stocks today are slightly higher ahead of the FOMC’s decision on interest rates this afternoon. Today’s reports showed US housing starts and building permits for August were better than expected, bolstering the prospects for a soft landing and boosting stocks.
The markets will look to the 2-day FOMC meeting that concludes this afternoon to see whether policymakers will decide that a -25 bp cut in the fed funds target range would be adequate for a US economy that has shown signs of losing momentum or whether they will decide on a larger -50 bp rate cut instead. Also, fresh quarterly projections in the form of the Fed’s “dot plot” will offer further insight into the path of interest rates and the economy. In addition, today’s post-meeting comments from Fed Chair Powell will be scrutinized regarding the Fed’s future policy intentions.
US MBA mortgage applications rose +14.2% in the week ended September 13, with the purchase mortgage sub-index rising +5.4% and the refinancing mortgage sub-index rising +24.2%. The average 30-year fixed rate mortgage fell -14 bp to a 2-year low of 6.15% from 6.29% in the prior week.
US Aug housing starts rose +9.6% m/m to a 4-month high of 1.356 million, stronger than expectations of 1.318 million. Aug building permits, a proxy for future construction, rose +4.9% m/m to a 5-month high of 1.475 million, stronger than expectations of 1.410 million.
The markets are discounting the chances at 100% for a -25 bp rate cut at the conclusion of today’s FOMC meeting and at 66% for a -50 bp rate cut at that meeting.
Overseas stock markets today are mixed. The Euro Stoxx 50 is down -0.36%. China's Shanghai Composite recovered from a 7-1/4 month low and closed up +0.49%. Japan's Nikkei Stock 225 closed up +0.49%.
Interest Rates
December 10-year T-notes (ZNZ24) today are down -9 ticks. The 10-year T-note yield is up +3.8 bp at 3.683%. Dec T-notes today are moderately lower on negative carryover from a slide in European government bonds to 1-week lows. Also, position squaring and long liquidation are weighing on T-notes ahead of this afternoon’s decision by the FOMC on interest rates. T-notes extended their losses after US Aug housing starts and building permits rose more than expected.
European government bond yields today are moving higher. The 10-year German bund yield climbed to a 1-week high of 2.185% and is up +4.1 bp at 2.184%. The 10-year UK gilt yield rose to a 1-week high of 3.837% and is up +6.8 bp to 3.836%.
ECB Governing Council member Villeroy de Galhau said, "The ECB has cut interest rates twice and should continue to cut them," as victory over inflation is "within sight."
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 32% for the October 17 meeting.
US Stock Movers
Super Micro Computer (SMCI) is up more than +4% to lead gainers in the S&P 500 and Nasdaq 100 after Needham & Co. initiated coverage on the stock with a recommendation of buy with a price target of $600.
Cruise line operators are climbing today, with Carnival (CCL) and Norwegian Cruise Line Holdings (NCLH) up more than +2% and Royal Caribbean Cruises Ltd (RCL) up more than +1%.
VF Corp (VFC) is up more than +5% after Barclays upgraded the stock to overweight from equal weight with a price target of $22.
Victoria’s Secret & Co (VSCO) is up more than +5% after Barclays upgraded the stock to equal weight from underweight.
United States Steel (X) is up more than +1% after a US security panel granted Nippon Steel permission to refile its plans to purchase the company for $14.1 billion.
GE Healthcare (GEHC) is up more than +1% after BTIG upgraded the stock to buy from neutral with a price target of $100.
ResMed (RMD) is down more than -5% to lead losers in the S&P 500 after Wolfe Research downgraded the stock to underperform from peer perform with a price target of $180.
Cencora (COR) is down more than -2% after Bank of America Global Research downgraded the stock to neutral from buy.
Incyte Corp (INCY) is down more than -2% after Truist Securities downgraded the stock to hold from buy.
DaVita (DVA) is down more than -2% on signs of insider selling after an SEC filing showed CEO Rodriguez sold $9.86 million of shares on Monday.
Edwards Lifesciences (EW) is down nearly -1% after Jeffries downgraded the stock to hold from buy.
Hilton Grand Vacations (HGV) is down more than -1% after Goldman Sachs initiated coverage on the stock with a sell recommendation and a price target of $31.
Earnings Reports (9/18/2024)
Ennis Inc (EBF), General Mills Inc (GIS), Steelcase Inc (SCS).
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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