Mid-Week Market Minute 9.06.23

Stocks Lower; Federal Reserve Meeting Sept. 19-20

Global stocks traded lower in this holiday shortened trading week. As of mid-week, the S&P 500 was lower by about 1%, while the Russell 2000 (small cap index) fell about 2%. International stocks moved lower as well as the MSCI EAFE declined by about 1%. In bonds, yields moved higher as investors fear higher interest-rate policy could be around for longer than originally anticipated.

The rest of this week is relatively light as far as market moving economic reports. Wednesday will bring data on the U.S. trade deficit and services industry, as well as a new beige book, which summarizes economic activity. On Thursday, markets will get a look at initial jobless claims for further insights into the labor market following Friday’s nonfarm payrolls report. From there, investors will shift their attention to this month's Federal Reserve meeting, which concludes on Wednesday, Sept. 20. The central bank is largely expected to keep interest rates unchanged at the September meeting; however, the news conference by Federal Reserve Chair Jerome Powell will be closely followed for hints at the future path of policy. Right now, markets are still pricing in a nearly 40% chance the Fed hikes rates one more time before the end of this year, which would most likely come at the November meeting.

In Asia, economic data was mixed. On one hand, China’s services PMI recorded its slowest growth in eight months, while Japan saw its most rapid expansion since May. On the commodity front, we’ve seen oil prices rally substantially since mid-June, adding to inflation concerns. Most recently, Saudi Arabia and Russia extended their voluntary oil production cuts through the end of the year, helping offset a potentially weaker demand outlook.

Source: GSAM, CNBC, JPMorgan

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