“Investing should be like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”
-Paul Samuelson
Here’s what you need to know this week:
- Stocks post their best week of the year
- The Federal Reserve prepares to cut interest rates
Banner Week
Stocks had their best week of the year on the heels of another encouraging inflation report. Last week’s Consumer Price Index (CPI) report showed monthly inflation at 0.2% and annualized inflation at 2.5%, marking the lowest print since February 2021[1]. Investors were clearly pleased with the report: the Dow Jones finished the week up 3%, the S&P 500 gained more than 4% and the NASDAQ posted a stellar 6% gain[2]. The Dow Jones and S&P 500 are both less than 1% from breaking new all-time highs while the NASDAQ still has a little more ground to make up. Markets have been muted this week as we await the Federal Reserve’s decision.
Rate Cuts (Finally)
The Federal Reserve has been meeting for the last two days and is set to announce their decision on interest rates at 1:00 PM CT later today. If the Fed does cut rates as most people expect, it will mark the first reduction in interest rates since March 2020. Analysts are treating a rate cut as a virtual certainty at this point, and the debate now is the magnitude of the cut.
As of writing, the bond market is pricing in a 59% chance of a 50 basis point (0.50%) cut as opposed to the 25 basis point cut that analysts have been expecting for months[3]. Proponents of a 50 bp cut say that the weakening labor market demands strong action from the Fed to prevent things from getting worse. Opponents say that a larger cut may spook the markets by implying that the Fed has fallen behind the curve.
We will receive more context on the Fed’s decision shortly after the announcement when Federal Reserve Chairman Jerome Powell gives a press conference at 1:30 PM CT. Powell will explain the Fed’s thought process as well as their outlook for the next few months. The next interest rate meetings are in November and December, so Powell will do his best to instill confidence during this presser. Stocks typically oscillate wildly in the moments after a Fed decision, so don’t give too much credence to a strong swing upwards or downwards. Until we get the decision, markets are likely to remain docile.
What Else
- Typhoon Bebinca made landfall in Shanghai, China, marking the strongest storm to hit the city since 1949
- 33,000 Boeing workers in Seattle went on strike after Boeing and the worker’s union failed to reach an agreement
- Three major wildfires are currently spreading across Southern California
- OU plays 6th ranked Tennessee this Saturday at 6:30 PM on ABC
- OSU plays 12th ranked Utah this Saturday at 3:00 PM on FOX
What We’re Reading
The Khao Kheow Open Zoo in Thailand has a new star: a two-month-old pygmy hippo named Moo Deng. This photogenic baby has taken over social media platforms this week and the zoo is seeing record numbers of visitors. Click below to see photos of Moo Deng and read about the young hippo:
What’s Happening Downtown
The Myriad Gardens is hosting Dylan Meets Marley, a tribute to both Bob Dylan and Bob Marley this Friday, September 20th at 8 PM. The event is free to attend and will feature performances from popular local bands as well as food and drink vendors. Click below to learn more:
Written by: Kane Ogle, CFP®
Steve Beck, Amber Eduvigen, CFP®, Kane Ogle, CFP®, Cale Olbert, CFP®, Brett Valentine, Brandon Ingerson, Jenni Hess, Anne Boone
Sources: [1] CNBC [2] Yahoo! Finance [3] CME FedWatch