Market on Edge: S&P 500 Soars to New Heights as FOMC Looms Large
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Jerome Powell, Chairman of the US Federal Reserve [AP = 연합뉴스]
New York Stock Market Closes Mixed Ahead of FOMC Decision
The New York stock market closed mixed on the 17th (local time) with the S&P 500 index hitting an all-time high for the day. A day before the US Federal Reserve’s (Fed) decision on whether to cut interest rates, the market is paying attention to the size of the cut.
On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 41,606.18, down 15.90 points (0.04%) from the previous day. The Standard & Poor’s (S&P) 500 index, which focuses on large-cap stocks, closed at 5634.58, up 1.49 points (0.03%). The S&P 500 rose to 5670.81 in early trading, hitting a record high. The Nasdaq composite index, which focuses on technology stocks, rose 35.93 points (0.20%) to 17,628.06.
Market Expectations for Interest Rate Cut
Market participants are very likely that the Federal Reserve will cut interest rates by 50bp (1bp = 0.01% point), which is a big cut. According to FedWatch, a group of the Chicago Mercantile Exchange (CME), participants in the interest rate futures market reflected a 65.0% probability that the Federal Reserve would cut interest rates by 50 basis points. On the other hand, the possibility of a 25bp cut is around 35.0%.
Retail Sales Growth Rate Revised Upwards
On this day, the US Department of Commerce announced that retail sales in August increased by 0.1% from a month ago. Initially, the market expected retail sales in August to fall 0.2% compared to a month ago. The July retail sales growth rate was revised upwards from 1.0% to 1.1%. Retail sales in the US account for two-thirds of the US economy.
International Oil Prices Rise
International oil prices rose on news that more than 1,000 Hezbollah members were injured in a pager explosion. On the New York Mercantile Exchange (NYMEX), West Texas Intermediate (WTI) crude oil for October delivery closed at $71.19 a barrel, up $1.10 (1.6%) from the previous price.