That means policy doesn't have to be shifted significantly to put the real fed-funds rate near the neutral rate, noted economists at Daiwa Securities, in a note. Three tightenings this year would leave the real fed-funds rate just a half percentage point below one estimate of the neutral rate, they said (see chart below). "It is only when the real rate exceeds 2% that equity returns have suffered," according to Staines. The widely anticipated quarter-point rise would lift the fed-funds rate to 0.75%-to-1% on Wednesday. The late technical analysis pioneer Edson Gould minted the rule that haunts stock market bulls this week as investors anticipate the Federal Reserve delivering its third rate increase since December 2015.
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The Fed shows its interest rate forecasts in a "dot plot," a chart that shows anonymous projections for the Fed funds rate. Wall Street is broadly expecting a quarter point hike, after a parade of Fed officials, including Fed Chair Janet Yellen, talked up the fact that the Fed could raise interest rates at its March meeting. Stovall said as the Fed meeting ends Wednesday, market focus will be on the status of tax reform and other pro-growth policies in Washington. "We're watching to see if the health care is derailing tax reform," he said, adding that if the market starts to get concerned tax reform will get dragged out that would be a negative. The market is most focused on what the Fed will say not only in its Wednesday afternoon statement but in its forecasts for interest rates, inflation and economic growth.
Oil prices CLJ7, -1.47% dropped 1.9% as an OPEC report showed production from its largest member, Saudi Arabia, is increasing. The energy sector led the declines, down 1.3%, while materials and industrials facebook/" target="_blank">shares fell about 0.8%. But some analysts suggested the pullback in the stock market hasn't finished yet. Stocks to watch: Energy shares took a hit, following a drop in oil prices. U.S. stocks traded lower on Tuesday as a persistent slump in oil prices put pressure on energy shares, while investors were also making guarded moves as the Federal Reserve's two-day Federal Open Market Committee meeting started.
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Fed anticipation and snow storm could put temporary freeze on market action
The Fed shows its interest rate forecasts in a "dot plot," a chart that shows anonymous projections for the Fed funds rate. Wall Street is broadly expecting a quarter point hike, after a parade of Fed officials, including Fed Chair Janet Yellen, talked up the fact that the Fed could raise interest rates at its March meeting. Stovall said as the Fed meeting ends Wednesday, market focus will be on the status of tax reform and other pro-growth policies in Washington. "We're watching to see if the health care is derailing tax reform," he said, adding that if the market starts to get concerned tax reform will get dragged out that would be a negative. The market is most focused on what the Fed will say not only in its Wednesday afternoon statement but in its forecasts for interest rates, inflation and economic growth.
Stock market weakens as oil drop hits energy shares, Fed meeting begins
Oil prices CLJ7, -1.47% dropped 1.9% as an OPEC report showed production from its largest member, Saudi Arabia, is increasing. The energy sector led the declines, down 1.3%, while materials and industrials facebook/" target="_blank">shares fell about 0.8%. But some analysts suggested the pullback in the stock market hasn't finished yet. Stocks to watch: Energy shares took a hit, following a drop in oil prices. U.S. stocks traded lower on Tuesday as a persistent slump in oil prices put pressure on energy shares, while investors were also making guarded moves as the Federal Reserve's two-day Federal Open Market Committee meeting started.
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collected by :Jack Luxor
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