Markets Lower Ahead of Fed Policy Decision, Forward View

Tuesday, December 17, 2024Markets finished Tuesday’s regular trading session lower for the day, muting the Nasdaq’s record high close yesterday, but now nine-straight down days for the blue-chip Dow — a streak we haven’t seen for six years. The Dow slipped another -267 points, -0.61%, the S&P 500 was -0.39%, the Nasdaq -0.32% and the small-cap Russell 2000 the worst of the pack, -1.26%.As we know, a cautious stance prevails ahead of Wednesday’s conclusion of the Federal Open Market Committee (FOMC), where the near-certain 25 basis-point (bps) cut will take interest rates down to 4.25-4.50% for the first time in almost two years. But what we don’t know is whether there will be any voting members of the FOMC who vote to keep rates where they are, and how many of them there might be.After the press release of the Fed decision, Fed Chair Jerome Powell will address a press conference to help explain the Fed’s decision and what he sees for future potential cuts in the new year. Depending on what Powell projects — and over years of serving as Fed Chair, he’s learned how to be effective this way — there is potential to see meaningful market movement in one direction or the other.Industrial Production/Capacity Utilization Cooler than ExpectedEarlier today, Industrial Production for November came in at +0.1% on headline, 20 basis points (bps) below consensus expectations, though still a bounce-back from the -0.3% reported for October. Capacity Utilization reached +76.8% last month, lower than the +77.2% estimated and the +77.1% reported in the prior month.These are perhaps more sluggish productivity numbers that analysts were looking for, but combined with the in-line Q3 Productivity numbers we saw last week, they do not appear to be much to worry about. These again do not seem to be moving the needle in terms of what the Fed will decide on interest rates tomorrow afternoon.Homebuilder Data: Today and TomorrowAlso this morning, we saw a new Homebuilders Confidence Index for December, which came in-line with the previous month’s 46, and nicely up from the 12-month low 39 in August. Homebuilders Confidence seemed to take a jump forward post-election, but appears to be stalling a bit sub-50, where we were back in March and April of this year.Wednesday morning brings new Housing Starts and Building Permits data, both for November. Both are expected to be up somewhat month over month — 1.34 million in new starts from 1.31 million in October — with Building Permits projected to reach 1.43 million seasonally adjusted, annualized units, a slight improvement from the 1.42 million units reported the prior month. These are all still historically low: not counting the pandemic, we’ve had six months of new starts levels not seen since September 2019. Lower interest rates will eventually help this cause — bringing down mortgage rates will help put revived interest into the housing market.Questions or comments about this article and/or author? Click here>>Zacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco QQQ (QQQ): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports SPDR Dow Jones Industrial Average ETF (DIA): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks