Wall Street Week Ahead

Wall Street and the Fed's interest rate decision

This week promises to be important for Wall Street with all eyes on the Federal Reserves interest rate announcement. What cannot be ignored is the chance the Fed make a Political decision to aid Democrats in the run up to the 2024 Presidential Election.

Investors are anticipating the verdict which will have a huge impact on market mood and economic estimates in the coming months.

The Feds rate decision comes as inflation concerns continue to weigh heavily on the markets. Fed Chair Jerome Powell has emphasized the necessity of controlling inflation and this weeks decision will provide insight into his strategy. While recent data show that inflation has cooled, it remains above the Fed's 2% objective raising worries about whether the central bank will keep interest rates stable or raise them again.

Key Economic Indicators to Watch:
Aside from the interest rate decision, other major economic indicators will be revealed this week, providing more insights into the status of the US economy:

CPI data (Consumer Price Index) is expected to reflect inflation trends and consumer pricing pressures, which will influence the Fed's outlook.
Retail Sales Reports: A glimpse of consumer spending, a key driver of economic growth.
Corporate profits: Several large firms will report profits this week, which may influence market mood.
Market Expectations:
Wall Street is pricing in a probable slowdown in rate rises, but uncertainty remains. Some observers believe the Fed may take a hawkish approach, leaving the door open for future rises if inflation does not fall quickly enough. Others believe the Fed will chose to pause rate hikes to avoid a further economic slump.

Stock markets are expected to face increased volatility, with the Fed's decision potentially setting the tone for the fourth quarter of 2024. Sectors such as technology, finance, and real estate will be closely monitored because they are particularly susceptible to interest rate fluctuations.

Investor Sentiment
Investor mood has remained cautious as the balance between inflation control and economic development grows more difficult. A clearer picture of the Fed's approach for the rest of the year may help stabilize markets, but much will depend on how Powell frames the central bank's reasoning during his post-decision press conference.

Weekly calendar

Monday

Economic data: Empire Manufacturing, September (-3.7 expected, -4.7 prior)

Earnings: No notable earnings

Tuesday:

Economic data: Retail sales, month over month, August (-0.2% expected, +1% previously); Retail sales ex-auto and gas, August (+0.3% expected, +0.4% previously); Industrial production, month over month, August (0.2% expected, -0.6% previously); Manufacturing (SIC) production, August (0.0% expected, -0.3% previously); NAHB Housing Market Index, September (41 expected, 39 previously)

Earnings: Ferguson Enterprises (FERG)

Wednesday

Economic data: Federal Reserve monetary policy decision (expected interest rate cut to range of 5.0% to 5.25% from range of 5.25% to 5.5%); MBA Mortgage Applications, week ending Sept. 13 (1.4% previously); Building permits month over month, August (+1.1% expected, -3.3% previously); Housing starts month over month, August (+5.8% expected, -6.8% previously)

Earnings: General Mills (GIS), Steelcase (SCS)

Thursday

Economic data: Initial jobless claims, week ending Sept. 14 (230,000 previously); Continuing claims, week ending Sept. 7 (1.85 million previously); Existing home sales month over month, August (-1.3% expected, 1.3% previously)

Earnings: FedEx (FDX), Lennar (LEN), Darden Restaurants (DRI), FactSet Research (FDS), Cracker Barrel (CBRL), Endava (DAVA), MillerKnoll (MLKN)