Markets Remain Muted as Investors Await Clarities from the Fed

By Joyce Yu

Philadelphia, PA–The Wall Street moved sideways Tuesday morning before naming of the next Fed chairman and payroll report on Friday.

U.S. stocks market was little changed on Monday. The Dow Jones industrial average dropped 0.4% on Monday, the S&P 500 dipped 0.3% and the Nasdaq closed flat. Events later this week, however, are expected serve as new catalysts for the global equity markets. President Donald Trump signaled he’ll name a new Fed chair Thursday, while Wednesday brings the central bank’s rate decision and some specifics on tax plans. Jerome Powell would be the first investment banker to chair the Fed, according to a CNN report.

On economic news, the University of Michigan’s consumer sentiment index released this morning showed improvement in household confidence which is expected to help underpin their spending, the biggest part of the economy. The index climbed in October to the strongest since the start of 2004.

In the meantime, Wall Street will be hearing more earnings reports from corporates such as Aetna, Kellogg, Pfizer, and MasterCard. Under Armour slumped over 15% after the company slashed 2017 sales and profit forecasts and reported its first year-on-year fall in revenue. Its bigger rival Nike also declined 1.48 percent.

“We’re still in the thick of earnings and have seen some high-profile companies driving the market a lot,” Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas, told the Reuters, “The bigger news as far as economics goes is the payroll numbers on Friday.”

The earnings season has been closely tracked to justify stretched valuations and results have been largely above expectations. With more than half the S&P 500 components reported, third-quarter earnings are estimated to have climbed 6.7%, up from an expectation of 5.9%-growth at the start of October, according to Thomson Reuters I/B/E/S.

Data from Europe Tuesday sent mixed signals about the region’s economy. With its economy expanded for an 18th consecutive quarter, the euro-area’s unemployment rate inched lower in September, but consumer inflation unexpectedly slowed in October, complicating the European Central Bank’s task as it considers tightening policy.

“It wasn’t quite the trifecta of good eurozone data releases we had been hoping for,” the Financial Times quoted Viraj Patel, foreign exchange strategist at ING.

“The focus is now turning to the US and key events including President Trump’s Fed chair nomination, the House Republicans’ tax bill and the US labour market report later this week. We’re less optimistic that the dollar can find a catalyst in any of these to push higher and expect a low-yielding Goldilocks environment to prevail. Good news for emerging markets in store!”