Inventory futures glide upper as markets wait for Fed resolution

Stock futures drifted slightly higher Wednesday morning, extending gains from Tuesday’s regular session, as investors awaited the Federal Open Market Committee’s (FOMC) September monetary policy statement and remarks from Federal Reserve Chair Jerome Powell. Each is set to provide further insight into central bankers’ assessments of economic activity during the ongoing pandemic.

The FOMC’s September policy statement is due for release at 2 p.m. ET on Wednesday and will be followed by remarks from Powell about a half-hour later. With central bank officials having previously telegraphed that rates would remain at the zero bound for at least the next two years, investors will scour for clues as to what might prompt policymakers to raise rates down the line. Less than a month ago, Fed officials suggested at their annual economic symposium that their new policy framework would allow them to avoid preemptively raising interest rates to stave off higher inflation.

“Chair Powell will emphasize the key message from the Fed’s new strategy; they’re pursuing growth,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note Tuesday.

“It’s not clear if the first FOMC meeting since the release of the Fed’s new Monetary Policy Strategy will bring any real shift in policy, though we think it unlikely that policymakers will seek immediately to add weight to their forward interest rate guidance,” Shepherdson added. “The minutes of the July 28-to-29 FOMC meeting make it clear that outcome-based guidance has some support within the Committee, but it appears not to be overwhelming; only ‘a number’ of participants—not ‘many’ or ‘most—favor the idea.”

“If the Fed doesn’t use this meeting to beef up its forward guidance, markets’ focus will be on the wording of the statement, which we expect will acknowledge the slowing momentum evident in much of the recent data, both official and unofficial,” he said.

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Fed Chair Powell’s remarks will also likely include another nudge for congressional lawmakers to pass more legislation targeted directly at helping Main Street businesses and households. Both Powell and other FOMC members have repeatedly underscored the importance of fiscal policy in tandem with monetary policy as being essential to the economic recovery.

8:30 a.m. ET: Retail sales rise less than expected in August, decelerating for a fourth straight month

US retail sales rose 0.6% month-on-month in August, according to the Commerce Department’s reported Wednesday. This followed a 0.9% increase in July, which had been downwardly revised from the 1.2% gain previously reported. Consensus economists had been looking for a 1.0% rise in retail sales.

While retail sales rose for a fourth straight month in August, the margin of increase has slowed considerably from the record 18.3% jump in May. August’s report marks the first since the expiration of the $600 in enhanced federal unemployment benefits.

The total value of retail sales held above pre-pandemic levels in August, after first breaching that threshold in July. Retail sales were 2.6% above August 2019 levels last month.

7:14 a.m. ET Wednesday: Stock futures point to a higher open ahead of Fed decision

Here were the main moves in markets as of 7:14 a.m. ET:

  • S&P 500 (^GSPC): +21.5 points (+0.63%) to 3,426.75

  • Dow (^DJI): +151.00 points (+0.54%) to 28,178.00

  • Nasdaq (^IXIC): +73.5 points (+0.64%) to 11,537.75

  • Crude (CL=F): +$0.93 (+2.43%) to $39.21 a barrel

  • Gold (GC=F): +$9.10 (+0.46%) to $1,975.30 per ounce

  • 10-year Treasury (^TNX): -1 bp to yield 0.669%

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6:05 p.m. ET Tuesday: Stock futures open little changed

Here were the main moves in equity markets, as of 6:05 p.m. ET Monday:

  • S&P 500 futures (ES=F): 3,407.25, up 2 points or 0.06%

  • Dow futures (YM=F): 28,042.00, up 15 point or 0.05%

  • Nasdaq futures (NQ=F): 11,473.00, up 8.75 points, or 0.08%

Federal Reserve Chairman Jerome Powell, wearing a face mask, testifies before the House of Representatives Financial Services Committee during a hearing on oversight of the Treasury Department and Federal Reserve response to the outbreak of the coronavirus disease (COVID-19), on Capitol Hill in Washington, U.S., June 30, 2020. Tasos Katopodis/Pool via REUTERS

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