On Friday, key US benchmark equity indexes experienced an uptick as market participants braced themselves for the Federal Reserve's pivotal monetary policy decision slated for next week. With the landscape of interest rates shifting, expectations are at the forefront of investor sentiment. Currently, market estimations suggest a 53% probability that the Federal Open Market Committee (FOMC) will implement a reduction of 25 basis points to its benchmark lending rate on Wednesday.
Meanwhile, the possibility of a more aggressive 50-basis-point cut is still notably in play, reflecting the uncertainty surrounding economic recovery dynamics as indicated by the CME FedWatch tool. In parallel, consumer sentiment in the United States has notably surged beyond analysts' forecasts for September.
Preliminary data from the University of Michigan's Surveys of Consumers indicated a rise in consumer confidence, alongside a significant drop in inflation expectations for the year ahead, hitting its lowest level since December 2020. This could suggest a shift in consumer behavior and economic perceptions that are vital for the Fed’s assessments. In the commodities sector, October West Texas Intermediate (WTI) crude oil prices weakened slightly, closing down by $0.32 to reach $68.65 per barrel.
Simultaneously, November Brent crude, which serves as the global benchmark, was last tracked at $71.72, declining by $0.35. Prices are gradually recovering from the three-year lows seen earlier this week, primarily attributed to lackluster demand from China. Additionally, Hurricane Francine has impacted supply, with the Bureau of Safety and Environmental Enforcement reporting that 732,316 barrels per day of production remains offline due to the storm’s effects on the Gulf of Mexico’s infrastructure. On the corporate front, Boeing ($BA) witnessed a decline of 3.5% following a unanimous rejection by members of the International Association of Machinists and Aerospace Workers regarding a tentative labor deal with the aircraft manufacturer.
This development may lead to potential disruptions in production schedules and impact the company's financial outlook. Moreover, Adobe ($ADBE) shares fell by 8%, as the software giant provided a fiscal Q4 revenue forecast that fell short of market expectations, even as their Q3 results outperformed predictions.
The response from investors highlights the importance of forward-guidance in the tech sector and market anticipations moving forward. With significant events unfolding, including Federal Reserve decisions and corporate earnings, market participants remain vigilant as they navigate the evolving economic landscape..