Wall Street Eyes Positive Start as Investors Anticipate Key Economic Data and Fed's Influence

Wall Street gears up for a positive opening, awaiting key economic data and Fed's signals. Stay updated on market trends and potential rate cuts.

Dec 18, 2023 - 09:42
Dec 18, 2023 - 09:43
Wall Street Eyes Positive Start as Investors Anticipate Key Economic Data and Fed's Influence
Wall Street Eyes Positive Start as Investors Anticipate Key Economic Data and Fed's Influence

Investors are optimistic as Wall Street's primary indexes set the stage for a higher opening. Market participants eagerly await crucial economic data later this week, seeking insights into potential interest rate adjustments by the Federal Reserve.

Market Momentum:

With signs of slowing inflation and expectations of monetary policy easing by the U.S. central bank, Wall Street is looking to conclude 2023 on a positive note. The Dow secured its third consecutive record high in a Friday session, while the S&P 500 marked a seven-week winning streak, the longest since 2017.

Upcoming Economic Data:

The focus this week is on essential economic indicators, including the Personal Consumption Expenditure index (PCE), a key inflation gauge preferred by the Fed. Additionally, investors are keenly observing weekly jobless claims, housing starts, and the final Q3 GDP report for market direction.

Fed's Influence:

Last week, U.S. equity markets experienced a rally after the Federal Reserve decided to keep interest rates unchanged. The collective forecasts of officials hinted at potential interest rate cuts totaling three quarters of a percentage point in 2024.

Market Pricing:

Traders currently estimate a 75% likelihood of a 25 basis points interest rate cut by the Fed in March, as per CME Group's FedWatch tool. This sentiment persists despite some top Fed policymakers cautioning against overenthusiasm in the markets.

Expert Perspectives:

Cleveland Fed President Loretta Mester emphasized that financial markets may have gotten ahead in anticipating the timing of interest rate cuts. Experts note a disconnection between the market's expectations and economists' projections, particularly in the velocity and magnitude of potential cuts.

Market Openings:

As of 8:36 a.m. ET, Dow e-minis were up 58 points (0.15%), S&P 500 e-minis up 13 points (0.27%), and Nasdaq 100 e-minis up 25 points (0.15%).

Outlook and Forecasts:

Goldman Sachs raised its S&P 500 forecast, anticipating the index to reach 5,100 by the end of 2024. The prediction factors in slowing inflation and ongoing Fed easing, contributing to sustained low real yields.

Individual Stock Movements:

Apple faced a 0.6% decline in premarket trading following reports that Chinese entities discourage staff from using iPhones and foreign devices at work.

Oil giants Exxon Mobil and Chevron gained 1.4% each as crude prices rose over 2%, prompted by Houthi attacks on ships in the Red Sea, raising concerns about potential oil supply disruptions.

United States Steel experienced a significant surge of 28.7% after Japan's Nippon Steel announced a $14.9 billion deal, including debt, to acquire the steelmaker.

Adobe saw a 2% increase after terminating its $20 billion merger with Figma, the design platform.

Nio, the Chinese electric vehicle maker, witnessed a 9.0% climb in U.S.-listed shares after securing a $2.2 billion investment from CYVN Holdings.

Also Read: Potential Market Turbulence as Record $5 Trillion Option Expiry Approaches Amid S&P 500's All-Time High

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