Stocks Down Modestly, 2 Days To Go Before The Fed's Announcement On Rates

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Stocks Down Modestly, 2 Days To Go Before The Fed's Announcement On Rates

	Profit from the Pros By Kevin Matras Executive Vice President
	Stocks Down Modestly, 2 Days To Go Before The Fed's Announcement On Rates Image: Bigstock Stocks closed marginally lower yesterday ahead of Wednesday afternoon's FOMC announcement. Earnings season continues. Not a lot of excitement yesterday. At least not like last week. But that should change with plenty of marquee names on the docket this week including Advanced Micro Devices today, Qualcomm tomorrow, Apple on Thursday, and Berkshire Hathaway on Friday. But the report everyone has been waiting for is the FOMC announcement on rates on Wednesday afternoon. After last Friday's PCE index, which showed core inflation coming down yet again (4.6% y/y vs. last month's 4.7%, and last year's high of 5.3%), not to mention last month's CPI and PPI reports which also showed inflation on the decline with core CPI at 5.5% vs. last year's peak of 6.5%, and core PPI at 3.4% vs. last year's peak of 8.2%, the expectation is for the Fed to raise rates one more time by 25 basis points, and then call it quits. That will put the terminal rate at the 5.1% level that they have been forecasting. In other news, yesterday's PMI Manufacturing Index came in at 50.2 for April, just under the consensus for 50.4, but just above March. The ISM Manufacturing Index came in at 47.1 for April, beating the consensus for 46.8, and March's 46.3. And Construction Spending was up 0.3% m/m vs. last month's pace of -0.3%, and views for 0.1%. On a y/y basis, construction spending is up 3.8%. Today we'll get Factory Orders, and the Job Openings and Labor Turnover Survey report (of JOLTS for short). I should also mention yesterday's purchase of First Republic Bank by JPMorgan Chase. JPM, at the request of the FDIC, paid $10.6 billion for most of FRC's assets. JPM's CEO, Jamie Dimon, remarked after the deal that "this part of the crisis is over." And that the purchase has helped stabilize the banking system. That being the case, investors will turn their focus back to earnings, and of course, the Fed's next move on rates, and if Wednesday's expected 25 bps move is finally the last one. If so, that could very well be the beginning of the next leg up in the market. See you tomorrow, Kevin Matras Executive Vice President, Zacks Investment Research
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