The stock market rises as the Federal Reserve deals with uncertainty and mixed economic signals

Market Analysis 03 Sep 2021

The stock market rises as the Federal Reserve deals with uncertainty and mixed economic signals.

With the latest monetary policy meeting of the Fed in focus, it is expected that the U.S. Federal Reserve will raise its key interest rates to the usual rate. The FOMC bets on 5.25%–5.50% for the second straight meeting. Yet other reports indicate that policymakers and officials are holding an open door for tightening policy if needed.

Despite this month’s strong market reports, the September inflation rate was slightly unchained, which adds further pressure on the U.S. market.

On the other hand, the attempt to squeeze consumers by raising the rate of interest will only backfire if it continues.

Marketers agree that taming inflation is the most exhausting battle the Biden administration had to combat, yet certain policies complicate things in terms of increasing market volatility. including foreign policies that are increasing the macroeconomic challenges, including the Chinese chip ban and the current Middle East tension.

At the Congress hearing, pro-Palestine protested during the foreign minister Antony Blinken

Hearing for standing with Israel and defending war crimes against the civilians of Gaza

The protest has gone viral all over the world, and a large proportion of protests are asking for a boycott against Starbucks, Meta, McDonald’s, and other high-end brands that support the IDF.

On top of that, the FED official noted that there must be caution with the two reunion meetings this year. As Goldman Sachs predicts, the U.S. Federal Reserve will keep raising interest rates until the end of this year. And probably for the first two quarters of next year, and only then will the economy succeed in its soft landing strategy and prevent a recession.

The Chicago Fed President and FOMC member Austan Goolsbee expresses his thoughts by saying, Holding to the simple historical correlations of what growth and labor market conditions mean for inflation in the face of positive supply developments is a recipe for overshooting and causing an unnecessary downturn.”

At the same time, ADP payrolls came in lower than market expectations. The private sector payroll report was lower than the market explanation. Yet in terms of previous data, October ADP payrolls are still showing signs of resilience and maintaining their strong ground. Now investors will turn their attention to Friday’s job report, which will probably contribute at least 50% to the FED decision and the interest rate hike percentage for this month.

Moving to the earning report session, Paypal (PYPL) and Airbnb (ABNB) are among the companies due to report earnings.

Norwegian Cruise Lines beat profit expectations but expects lower fourth-quarter results due to operational impacts from external events, leading to a 1.6% decrease in their shares. Match Group (MTCH) experienced a 17% stock slump following disappointing revenue guidance from the Tinder dating app parent company for the fourth quarter. Advanced Micro Devices (AMD) saw a more than 7% stock increase after forecasting fourth-quarter revenue and gross margins below Wall Street estimates.

Meanwhile, at 15:45 a.m. ET, the S&P 500 benchmark was up by 0.4%, the Nasdaq was up by 0.8%, and the Dow Jones Industrial Average slightly rose by 0.2%.

Written by Editor

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