{"id":62125,"date":"2023-09-17T13:48:06","date_gmt":"2023-09-17T17:48:06","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/powell-could-still-hammer-u-s-stocks-on-wednesday-even-if-the-fed-doesnt-hike-interest-rates\/"},"modified":"2023-09-17T13:48:09","modified_gmt":"2023-09-17T17:48:09","slug":"powell-could-still-hammer-u-s-stocks-on-wednesday-even-if-the-fed-doesnt-hike-interest-rates","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=62125","title":{"rendered":"Powell could still hammer U.S. stocks on Wednesday even if the Fed doesn\u2019t hike interest rates"},"content":{"rendered":"
\n

The past six weeks have left investors with more questions than answers about the outlook for U.S. monetary policy and, by extension, financial markets. <\/p>\n

And although the Federal Reserve is expected to leave its policy interest rates on hold Wednesday, Chairman Jerome Powell could still rattle markets as he\u2019s probed for clues about the central bank\u2019s thinking. <\/p>\n

\n

Powell\u2019s statement is expected to hew to what he said at the Jackson Hole, Wyoming, symposium in August and before that, during the central bank\u2019s July press conference, but market analysts say the question-and-answer session with reporters and the updated \u201cdot plot\u201d of policy makers projections for interest rates could potentially furnish market-moving news. <\/p>\n

See<\/strong>: U.S. economy is trending in the Fed\u2019s direction, so expect Powell to tread carefully next week<\/p>\n

\u201cJust because this meeting isn\u2019t widely considered to be \u2018in play\u2019 doesn\u2019t mean it is insignificant,\u201d said Steve Sosnick, chief strategist at Interactive Brokers, during a phone interview with MarketWatch. <\/p>\n

\u201cThe fact is, the Vix is relatively low. That indicates a very sanguine, if not complacent market. And a complacent market can sometimes be more susceptible to a negative shock.\u201d<\/p>\n

The Cboe Volatility Index
\n VIX,<\/span>
\n better known as \u201cthe Vix\u201d or Wall Street\u2019s \u201cfear gauge,\u201d finished below 14 on Friday, even as the Nasdaq Composite
\n COMP
\n and S&P 500
\n SPX
\n logged back-to-back weekly losses. Markets have seesawed recently as inflation has reaccelerated while the U.S. labor market and broader economy have slowed. <\/p>\n

What will investors be looking for, exactly? Presently, investors expect the Fed could start cutting interest rates again by the middle of next year. Anything that could disabuse them of this notion could undercut U.S. stocks while boosting Treasury yields and the U.S. dollar, analysts said.<\/p>\n

Liz Ann Sonders, chief market strategist at Schwab, said clues could potentially surface during the Q&A at the post-meeting press conference, which often has more of an impact on markets than Powell\u2019s statement. <\/p>\n

\u201cIt is that 45 minutes to an hour that tends to be more market moving,\u201d Sonders said during a phone interview with MarketWatch. \u201cIt is what they say about higher for longer and expectations around rate cuts in 2024, and whether Powell pushes back against that.\u201d<\/p>\n

Since the beginning of August, more data has emerged to suggest that the U.S. economy might finally be starting to respond to the pressure from the Federal Reserve\u2019s most aggressive campaign of interest-rate hikes since the 1980s. Corporate and personal bankruptcies have climbed. <\/p>\n

See<\/strong>: Bankruptcies spiked in August \u2014 the post-COVID rebound \u2018is becoming a reality\u2019<\/p>\n

There have also been indications that the torrid postpandemic labor market might be starting to cool. The Labor Department\u2019s monthly jobs report showed fewer than 200,000 jobs were created in August, while figures from the prior two months were also revised lower, and the unemployment rate ticked higher to 3.8%. <\/p>\n

At the same time, consumer-price inflation has accelerated for two months in a row. Some on Wall Street have started to worry about stagflation, and financial markets are now pricing in about even odds that the Fed will leave interest rates on hold. <\/p>\n

A report earlier this week showed consumer prices rose 3.7% over the 12 months through August, while the rise for the month was 0.6%, the biggest increase in 14 months.<\/p>\n

Adding to the complicated picture, the resumption of student loan payments in October has revived concerns about the consumer despite relatively robust retail-sales data released earlier this week, while an auto worker strike involving all of the \u201cBig Three\u201d U.S. carmakers and the threat of a government shutdown are also sowing fears about a hit to the economy. <\/p>\n

\u201cThe\u00a0triple\u00a0threat\u00a0from the resumption of student loan payments, a government shutdown and a strike by auto union workers could significantly weigh on GDP growth in Q4,\u201d said EY Chief Economist\u00a0Gregory\u00a0Daco in emailed commentary.<\/p>\n

Powell could be asked to weigh in on any or all of these. He also could be asked to directly address investors\u2019 expectations for the timing of the Fed\u2019s initial rate cut of the cycle. Expectations for a policy pivot already proved premature last summer, which caused a brief but powerful bear-market rally to fizzle. <\/p>\n

A repeat of this could again create problems for stocks, Sosnick said. <\/p>\n

\u201cLet\u2019s see if the Fed agrees with the market\u2019s assumptions about rate cuts,\u201d he added. <\/p>\n

Traders expect the central bank to keep interest rates on hold Wednesday, with market-based odds seeing a pause as a virtual certainty, according to the CME\u2019s FedWatch tool, which measures expectations based on trading in Fed funds futures. Expectations for another hike later this year are roughly split. <\/p>\n

See also: <\/strong>4 things to watch for at next week\u2019s Fed policy meeting<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The past six weeks have left investors with more questions than answers about the outlook for U.S. monetary policy and, by extension, financial markets. And although the Federal Reserve is expected to leave its policy interest rates on hold Wednesday, Chairman Jerome Powell could still rattle markets as he\u2019s probed for clues about the central […]<\/p>\n","protected":false},"author":1,"featured_media":62126,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-62125","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nPowell could still hammer U.S. stocks on Wednesday even if the Fed doesn\u2019t hike interest rates | iFintechWorld<\/title>\n<meta name=\"description\" content=\"The past six weeks have left investors with more questions than answers about the outlook for U.S. monetary policy and, by extension, financial markets.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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