Stock Market Update

[BRIEFING.COM] The stock market has moved cautiously ahead of the FOMC decision at 2:00 ET and Fed Chair Powell's press conference at 2:30 p.m. ET. The S&P 500 (+0.2%) and Nasdaq Composite (+0.2%) have mostly traded near prior closing levels.

The Dow Jones Industrial Average trades up 0.4%, benefitting from buy-the-dip action after logging its ninth consecutive decline yesterday. A rebound in NVIDIA (NVDA 135.80, +5.41, 4.2%) has provided some support to the DJIA and major equity indices with no specific catalyst to account for the buying. 

The market expects the FOMC to reduce the target range for the fed funds rate by 25 basis points to 4.25-4.50%. The unknowns that could garner a big response from investors include the Summary of Economic Projections (SEP) and the tone Fed Chair Powell takes in his press comments. 

Participants are eager to receive the updated SEP after recent inflation numbers showed price levels remain sticky above the Fed's 2.0% target. The last SEP in September estimated the FOMC would cut rates 100 basis points in 2025.

The bond market has also moved in front of the imminent policy announcement. The 2-yr note yield is down one basis point to 4.23% and the 10-yr note yield is up one basis point to 4.39%. This price action follows a November housing report that showed weaker-than-expected housing starts and stronger-than-expected building permits.

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index -0.7%; Prior 5.4%
• November Housing Starts 1.289 mln (Briefing.com consensus 1.347 mln); Prior was revised to 1.312 mln from 1.311 mln, November Building Permits 1.505 mln (Briefing.com consensus 1.430 mln); Prior was revised to 1.419 mln from 1.416 mln
  • The key takeaway from the report is that single-unit starts were up 6.4%, led by a bounce back in the South (+18.3%) following the hurricanes; however, single-unit permits, a leading indicator, were up just 0.1%.
• Q3 Current Account Balance -$310.9 bln (Briefing.com consensus -$283.0 bln); Prior was revised to -$275.0 bln from -$266.8 bln