Page One
Briefing.com Summary:
*Market participants aren't showing much conviction in front of Wednesday's FOMC decision.
*Dow component Home Depot provided some relatively disappointing guidance.
*President Trump is allowing the shipment of NVIDIA's H200 chips to approved customers in China.
There isn't much conviction in the equity futures market this morning. The futures for the major indices are all pointing to flattish beginnings.
Currently, the S&P 500 futures are down five points and are trading fractionally below fair value, the Nasdaq 100 futures are down 43 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 43 points and are trading 0.1% below fair value.
The lack of conviction can be attributed to a wait-and-see trade in front of the FOMC decision on Wednesday, which will also include an updated Summary of Economic Projections. Previews have been teasing the likelihood of the Fed checking in with a "hawkish cut," which is to say it will cut rates by 25 basis points but then signal that it is unlikely to cut rates again soon.
We suspect any such signal will revolve around comments pertaining to inflation trends, knowing that tomorrow's expected cut will come at a time when PCE inflation has moved higher since April and is much closer to 3.0% than the Fed's 2.0% inflation target.
The reaction to this decision should be relatively muted considering it won't be a surprise. A stronger reaction would be reserved for either a more dovish-minded perspective or a perspective that introduces the possibility of the Fed needing to raise rates again if inflation doesn't improve.
The latter was an observation made by RBA Governor Bullock at his press conference today after the RBA voted unanimously to leave its cash rate unchanged at 3.60%. That didn't necessarily upend Australia's stock market, but it was a sobering reminder that the inflation problem hasn't been solved in its entirety to fully embrace a neutral to more accommodative monetary policy.
So, it will be interesting to see what kind of spin Fed Chair Powell puts on things at his press conference.
For now, the market is spinning its wheels, taking in the news that President Trump is allowing NVIDIA (NVDA) to ship its H200 chips to approved customers in China, with 25% of sales going to the U.S. The FT reports, however, that China is planning on limiting access to H200 chips.
Other corporate news of note has featured earnings disappointments from AutoZone (AZO) and Toll Brothers (TOL), some relatively disappointing guidance for FY26 out of Dow component Home Depot (HD), and a more upbeat FY25 earnings outlook from CVS Health (CVS).
There is a little something for everyone, then. There just isn't much conviction behind trades that could move the market, which is understandable as participants wait on the FOMC decision.
