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Stock Market Today: Anticipation and Momentum Define the Day
September 17, 2024, marked a pivotal day in the stock market, characterized by anticipation, significant stock movements, and a mix of economic indicators that set the stage for the Federal Reserve's crucial FOMC meeting. As market participants eagerly await the Fed's decision on interest rates, the day's trading session was marked by notable gains and strategic moves by major tech companies.
Market Performance
The Dow Jones Industrial Average ($^DJI$) closed at an all-time high, rising 0.6% or 228.30 points to 41,622.08. This upward momentum was driven by 25 of its 30 components ending in positive territory, while the remaining five closed in the red.
The S&P 500 ($^GSPC$) also saw a positive day, advancing 0.1% to finish at 5,633.09. This move kept the benchmark index less than 1% below its all-time high recorded in July, with nine out of its 11 broad sectors ending in positive territory.
The tech-heavy Nasdaq Composite ($^IXIC$), however, finished the day in negative territory, declining 0.5% to 17,592.13. This decline ended a five-day winning streak, largely due to weak performance by AI-based semiconductor stocks, with Arm Holdings plc ($ARM$) being the major loser, dropping 6.1%.
Fed Rate Cut Expectations
The central theme of the day was the impending Federal Reserve meeting, scheduled for September 17-18. Market expectations are high for the first interest rate cut since March 2020, with the CME FedWatch tool indicating a 63% probability of a 50 basis point reduction and a 37% likelihood of a 25 basis point cut.
These expectations are fueled by recent economic data, including robust retail sales figures for August, which exceeded Wall Street's forecasts. This data point is crucial as it could influence the Fed's decision on the extent of the rate cut. The resilient labor market data also plays a significant role, as signaled by Fed Chairman Jerome Powell during the Jackson Hole Economic Policy Symposium.
Retail Sales and Economic Indicators
Retail sales data for August showed a stronger-than-expected performance, which could impact the Fed's decision. This positive data, combined with other economic indicators, suggests that consumer expenditure remains robust despite concerns about a potential slowdown. The New York Fed's monthly survey of manufacturers in New York State also reflected a positive trend, with the index rising to 11.5 in September, its highest level in 2024.
Tech Sector Momentum
The tech sector was a key driver of the day's gains, particularly with significant announcements from major tech companies. Microsoft ($MSFT$) bolstered confidence in tech stocks by announcing a $60 billion share repurchase plan and a 10% increase in its dividend to $0.83 per share, effective November 21. This move aligns with a recent trend among major tech firms that have initiated or increased stock buyback and dividend programs.
Intel ($INTC$) also made headlines by securing Amazon ($AMZN$) as a multi-billion-dollar client for artificial intelligence chips, expanding an existing partnership to provide custom chips for Amazon's cloud services division. This news sent Intel's stock surging over 6% during the morning session.
Homebuilder Confidence
Homebuilders are expressing increased confidence in the housing market as mortgage rates reach their lowest levels since February 2023. The National Association of Home Builders (NAHB) Wells Fargo Housing Market Index increased by two points to 41 in September, breaking a streak of four consecutive monthly declines. This rise in confidence is attributed to lower interest rates, which have improved builders' outlook for future new sales.
Market Sentiment and Volatility
The fear-gauge CBOE Volatility Index ($VIX$) rose 3.5% to 17.14, indicating some level of market apprehension ahead of the Fed's decision. However, the overall market sentiment remains positive, with advancers outnumbering decliners on the NYSE by a 2.74-to-1 ratio and a 1.17-to-1 ratio on Nasdaq.
Sector Performance
Several sectors performed well during the day. The Communication Services Select Sector SPDR ($XLC$), the Financials Select Sector SPDR ($XLF$), and the Energy Select Sector SPDR ($XLE$) advanced 1.1%, 1.3%, and 1.1%, respectively. These gains reflect broader market optimism and sector-specific strengths.
Global Economic Context
The global economic expansion picked up pace in August, driven primarily by services, while manufacturing output edged into decline. The J.P.Morgan Global PMI Composite Output Index registered 52.8 in September, up from 52.5 in August, indicating a growth rate of 2.9% in August. This trend suggests easing price pressures and a potential for lower global interest rates in the coming months.
Conclusion
September 17, 2024, was a day marked by anticipation and strategic moves in the stock market. As the Fed prepares to announce its monetary policy decisions, market participants are closely watching economic indicators and sector performances. The tech sector's momentum, driven by significant announcements from Microsoft and Intel, added to the day's positive sentiment. With mortgage rates at their lowest levels since February 2023 and homebuilder confidence rising, the housing market also looks promising.
The upcoming Fed decision will be a critical factor in shaping market sentiment and direction. Whether the Fed opts for a 25 or 50 basis point rate cut, the impact on market stability and investor confidence will be significant. As we move forward, it will be essential to monitor these developments closely to understand their implications for the broader market.
In the midst of these expectations and uncertainties, one thing is clear: the stock market remains a dynamic and responsive entity, influenced by a complex interplay of economic data, policy decisions, and sector-specific performances. As we navigate these waters, staying informed and vigilant will be key to making informed investment decisions.
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