U.S. benchmark equity indexes experienced a mixed performance on Tuesday as market participants analyzed the latest economic data while eagerly awaiting the Federal Reserve's impending monetary policy decision. At the forefront is the looming consideration regarding the central bank's next move on interest rates.
Currently, the CME FedWatch tool reflects a 65% probability that the Federal Reserve's monetary policy committee will opt for a reduction in its benchmark lending rate by 50 basis points during the upcoming Wednesday meeting. In contrast, the remaining odds favor a more conservative 25-basis-point reduction.
As analysts dissect this forecast, Stifel's commentary underscores a probable scenario where the committee maintains a base case of 25-basis-point cuts commencing this week, though they remain cautious about committing to actions in the following meetings. The economic landscape also features an intriguing development with U.S.
retail sales in August, which rose unexpectedly against Wall Street’s predictions that indicated a potential decline. Nonetheless, despite this growth, the rate of increase has shown signs of slowing down, particularly amidst downturns in sales at gasoline stations and motor vehicle dealerships, according to recent Census Bureau data.
BMO Capital Markets has noted that consumer spending's current health suggests the Federal Reserve is under little pressure to launch an aggressive easing cycle, leading them to adopt a more conservative outlook regarding potential rate adjustments. From the commodities sector, crude oil prices displayed upward movement with October West Texas Intermediate crude oil settling at $71.19 per barrel after an increase of $1.10.
Similarly, November Brent crude, the global benchmark, was also seen rising by $0.90, reaching $73.65, as supply constraints persist despite waning demand from China. In the pharmaceutical sector, shares of Moderna ($MRNA) surged by 4% following the announcement that the company received Health Canada's approval for its updated Spikevax COVID-19 vaccine, specifically targeting the KP.2 sub-lineage of SARS-CoV-2, now authorized for individuals aged six months and older.
Conversely, Accenture ($ACN) experienced a downturn in shares, decreasing by 4.7% after reports surfaced from Bloomberg News indicating that the company is postponing most staff promotions until June, raising concerns about workforce morale and company culture. As we move forward in a fluctuating economic environment, market observers remain vigilant, keeping a close watch on the interplay between consumer behavior, commodity prices, and the Federal Reserve's monetary policy decisions..