Key Points
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All eyes are on the Federal Reserve’s meeting this week.
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Interest rates are expected to remain unchanged.
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In the meantime, macro headwinds have caused lingering fears.
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The stock market ended a 9-day winning streak by closing red yesterday, and the market seems to be extending these losses ahead of the Federal Reserve’s meeting. The meeting will start today and conclude tomorrow. Analysts don’t expect interest rates to be cut, even though GDP has started to contract after the solid jobs report last week.
Nothing major has happened today to prompt the market-wide selloff, so this is mostly Wall Street’s optimism starting to cool off as trade deals with countries are yet to materialize. Meanwhile, the impact of tariffs is starting to hit companies.
Here’s a market update as of 10:30 A.M (ET) today.
- The S&P 500 is down 27.68 points, or 0.49%.
- The Nasdaq Composite is down 122.21 points, or 0.68%.
- The Dow Jones Industrial Average is down 176.56 points, or 0.43%.
May Fed Meeting
The policy decision announcement is scheduled for tomorrow at 2:00 P.M. (ET). This will be followed by Chair Jerome Powell’s press conference at 2:30 P.M.
Most investors on Wall Street expect the federal funds rate at its current range of 4.25% to 4.50%. CME FedWatch Tool shows a 97.3% probability that rates will remain unchanged at this meeting. The Federal Reserve has mostly been going along with market expectations, so this time is unlikely to be different.
That said, the economy is mixed right now due to GDP contracting, but job growth came in better than forecasts. Inflation has also been cooler than expected, but the Fed expects that once companies run out of inventory, they could be forced to start increasing prices.
Scott Bessent On Treasury Oversight
US Treasury Secretary Scott Bessent made the following comments this morning:
- “I expect Q1 GDP data to be revised upwards.”
- “I expect tax collections to be robust going forward, AI is going to enhance collections.”
- “Nothing in the data indicates that the US is in a recession.”
- “The US government will never default, we will raise the debt ceiling.”
- “Perhaps as early as this week we will be announcing trade deals with some of the US’ biggest trade partners.”
- “Many trading partners have approached us with very good offers.”
- “I can see a substantial reduction in tariffs on US goods.”
- “We’re currently negotiating with 17/18 key trade partners, we have not engaged with China as of yet.”
- “Trump’s economic agenda is already bearing fruit.”
Macros
No critical macro figures are coming out today, but here’s what we have:
- US Trade Balance Actual at -$140.5 billion vs. -$137.15 billion forecast.
- US Redbook year-over-year 6.9% vs. 6.1% previously. The US Redbook index is a weekly economic indicator that tracks year-over-year sales growth in approximately 9,000 large US retail stores.
- US 3-Month Bill Bid-to-Cover at 2.74 vs. 3.1 previously.
Other Assets
- Gold is up 2.36% to $3,400.
- Crude Oil Futures are up 4% to $59.45.
- Natural Gas Futures are up 1.97% to $3.62.
- Bitcoin is down 0.47% to $94,386.
The image featured at the top of this post is ©Pgiam / iStock Unreleased via Getty Images.