In the latest trading session, US equity indexes experienced a decline during midday, reflecting the nervous energy in the market as investors awaited the Federal Reserve's impending policy announcement. The S&P 500 index saw a slight dip of 0.2%, settling at 5,624.3. Meanwhile, the Nasdaq Composite dropped by 0.3%, reaching 17,574.1, and the Dow Jones Industrial Average fell by 0.1%, landing at 41,551.5.
Notably, while certain sectors such as consumer staples, energy, and healthcare witnessed gains, the majority of sectors faced setbacks. All eyes are now on the Federal Open Market Committee, which is expected to release its statement and Summary of Economic Projections at 2:00 pm ET. This will be followed by a press conference at 2:30 pm ET led by Federal Reserve Chair Jerome Powell.
Analysts are grappling with the implications of the Fed's decisions on the economic landscape, making this a pivotal moment for market watchers. According to insights gathered by the CME Group from interest-rate traders, there exists a 61% probability for a rate cut of 50 basis points by the Federal Reserve as of Wednesday afternoon.
The alternative 39% likelihood hints at a more conservative drop of 25 basis points, suggesting that discussions around the Fed's approach to rate cuts are gaining momentum. This corresponds with a broader narrative where the Fed seems poised to initiate its first rate cut of the year. A note from Macquarie outlined expectations that the Fed would trim its target rate by 25 basis points, echoing a dovish undertone through both the dot plot projections and Powell's subsequent discourse.
The note emphasized, "If we are wrong, and the Fed cuts by 50bps, we expect the dovish implications will be countered by guidance from Powell indicating 25bps cuts for the last two Federal Open Market Committee meetings of the year." Interestingly, many Treasury yields observed an upward trend during this market session.
The yield on the 10-year Treasury note was up by 4.9 basis points, now at 3.69%, while the two-year rate saw an increase of 6.1 basis points, settling at 3.65%. On the surface of economic indicators, August housing starts demonstrated a robust increase of 9.6% from the previous month, reaching an annualized rate of 1.356 million.
This figure exceeded the expectations set by Bloomberg, which forecasted a rate of 1.32 million following a noteworthy decrease to 1.237 million in July. Likewise, building permits showed a promising rise of 4.9%, hitting a rate of 1.475 million in August, surpassing the expected 1.41 million. This uptick in permits, particularly in homes that were permitted but not yet started, paints an optimistic outlook for forthcoming housing starts in the upcoming month. Turning to specific company news, Wolfe Research made headlines by downgrading ResMed to an underperform rating from what they previously termed a peer-perform rating.
This shift included a price target adjustment to $180, which contributed to a staggering 5.8% drop in shares of ResMed during midday trading, marking it as the most significant decliner on the S&P 500 index. In the commodities sphere, West Texas Intermediate crude oil futures experienced a minor decline, slipping less than 0.1% to $71.21 per barrel.
Such fluctuations are indicative of the broader economic trends and policy changes shaping market behavior today..