I'm Colette Auclair, and here is Schwab's early look at the markets for Wednesday, December 18:
For the last time in 2024, the Federal Reserve is holding a meeting of its policymaking arm, and the two-day gathering will conclude later today. When the meeting ends, market participants are fully expecting to learn that the third rate cut of the year has been implemented.
At 2 p.m. Eastern time in the U.S., the Federal Open Market Committee is expected to announce that it has lowered its target fed funds rate by 25 basis points to a range of 4.25%-4.5%. Already this year, the FOMC has decreased rates by 75 basis points, first with a half-point cut in September, then following with a quarter-point reduction in November.
As of Tuesday afternoon, the CME FedWatch tool indicated that investors are placing 95.4% odds on a cut later today. However, what's far less certain is what the Fed will say in its statement accompanying the decision, when it will provide its views on the state of the economy. In addition, Fed Chair Jerome Powell may provide further insight when he speaks at a press conference after the decision is announced.
The nature of the statement and Powell's remarks will factor heavily into the market's prediction about what may come next for rates. For now, Wall Street generally isn't expecting another rate move at the January 2025 meeting, with almost 80% odds that the Fed will not announce a change during its first meeting of the new year.
Turning to the markets, major stock indexes were weaker across the board on Tuesday, including the ninth consecutive decline for the Dow Jones Industrial Average®, which lost 267.58 points (0.61%) to 43,449.90. The last time the Dow had that many down days in a row was all the way back in 1978. Meanwhile, the S&P 500® fell 23.47 points (0.39%) to 6,050.61; and the Nasdaq Composite® decreased 64.83 points (0.32%) to 20,109.06.
While the Fed is clearly the headline of the upcoming market day, there are a few additional news items that may bear watching. On the early side, the latest numbers are anticipated on housing starts and building permits. The market is expecting housing starts to be right at 1.35 million for November, while building permits are expected to total 1.43 million.
Also today, quarterly earnings are expected from food company General Mills before the open and from both homebuilder Lennar and semiconductor creator Micron after the close of trading.
Looking ahead to later in the week, notable data reports that are expected to arrive include an updated reading on GDP, existing home sales and personal consumption expenditure prices. Earnings from Nike and FedEx, among others, are also expected Thursday.
