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OffbeatFed meeting could be pivotal for stock market looking for 'knight in shining armor'

01:05  17 december  2018
01:05  17 december  2018 Source:   cnbc.com

Four things need to happen for the stock market to bottom, Jim Cramer says

Four things need to happen for the stock market to bottom, Jim Cramer says Four things need to occur for the stock market to break out of its downtrend, CNBC's Jim Cramer said as stocks plunged in Monday's trading session on worries about an expected interest rate hike from the Federal Reserve. require(["medianetNativeAdOnArticle"], function (medianetNativeAdOnArticle) { medianetNativeAdOnArticle.getMedianetNativeAds(true); }); "Now that pretty much everything's in bear market territory, maybe in a bear market, what's the formula for getting out of it?" he said on "Mad Money," adding that "this is the most treacherous market" he's witnessed "since the financial crisis.

The Fed 's meeting Wednesday could be pivotal for a stock market that has been crushed by worries about interest rate hikes, trade wars and global growth. Fed officials are expected to proceed with a quarter-point interest rate hike but sound a dovish tone by lowering their collective interest rate

Fed meeting could be pivotal for stock market looking for ‘ knight in shining armor ’ – (Source). The Fed may not be able to turn the tide for the stock market in the week ahead, but it could soothe some of the wild volatility that has been crushing stocks since October.

Fed meeting could be pivotal for stock market looking for 'knight in shining armor'© Provided by CNBC LLC Jerome Powell, Chairman of the Federal Reserve, speaking at the New York Economic Club on Nov. 28th, 2018.

The Fed may not be able to turn the tide for the stock market in the week ahead, but it could soothe some of the wild volatility that has been crushing stocks since October.

The Fed is expected to raise interest rates Wednesday by a quarter point, and the pressure is on for Fed Chairman Jerome Powell to sound dovish — but not too dovish. Fed officials are also expected to revisit their fed funds rate forecasts and roll back some of the rate hikes expected in the next several years.

A rare batch of selling suggests the stock market may have just hit ‘rock bottom’

A rare batch of selling suggests the stock market may have just hit ‘rock bottom’ If recent market action feels extraordinary, that’s because it has been. In fact, we’re seeing something that hasn’t happened since 2008, and, according to Dana Lyons of J. Lyons Fund Management, has only occurred a scant 11 times since 1960 — four straight sessions delivering intraday declines of at least 1.89% on the S&P 500 (SPX) A rare streak of selling pressure, no doubt.

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by bigbear0083 Fed meeting could be pivotal for stock market looking for ‘ knight in shining armor ’ – (Source) The Fed may not be able to turn the tide for … Read more.

"Equities are hoping that the Fed is almost done or [for] signals that they're going to pause. I think it's too premature for them to do that," said George Goncalves, head of fixed income strategy at Nomura. "The Fed was a little too optimistic for next year, and now they've got to come down. The recent price action is almost an overshoot on the bearish side."

The Fed should tweak its economic forecast, and it could note that it has concerns about global growth. Powell is also expected to hold a briefing, where he could discuss Fed officials' concerns about the impact of trade wars and possibly financial conditions.

There has been some speculation the Fed could hold off on a rate hike Wednesday, but it is widely expected to move forward and use its forecast and dovish tone to ease market fears that it is moving too aggressively.

Has The Market Peaked?

Has The Market Peaked? One of the strangest things about us humans is that we will always try to find ways to confirm our pre-existing beliefs and hypotheses. Even if we are dead wrong. We can all be guilty of it. We can't help it. It's human nature. Psychologists call it confirmation bias. It is dangerous. It is self-perpetuating. And it can seriously damage our wealth. require(["medianetNativeAdOnArticle"], function (medianetNativeAdOnArticle) { medianetNativeAdOnArticle.getMedianetNativeAds(true); }); Let's say there is a country that we have been longing to visit.

by bigbear0083 Fed meeting could be pivotal for stock market looking for ‘ knight in shining armor ’ – (Source) The Fed may not be able to turn the tide for …

by bigbear0083 Fed meeting could be pivotal for stock market looking for ‘ knight in shining armor ’ – (Source) The Fed may not be able to turn the tide for …

"Is the change in tone going to be enough to jump-start this market that only reacts to bad news? It may well be. It may be the pivot point," said Art Hogan, chief market strategist at B. Riley FBR.

Some strategists said if the Fed sparks a rally, there's a chance stocks could find a near-term bottom.

Robert Sluymer, technical strategist at Fundstrat, said key for the stock market will be how it trades coming out of the Fed meeting. "I think it's huge," he said. "A tremendous number of stocks have been selling off through 2018. You have a lot of weak stocks, but they're also deeply oversold from an intermediate standpoint. ... My guess is coming out of the Fed you're going to see some relief from that."

Sluymer said the market is testing the lows of its 2018 trading range. The S&P 500 closed at 2,599, off 1.9 percent Friday and 1.2 percent for the week. It is now down 2.8 percent for the year.

"I think the markets want way too much out of the Fed. Market participants want a knight in shining armor," said Goncalves. Goncalves said Nomura expects the Fed to eliminate one of the rate hikes in its collective forecast for next year, taking it to two instead of three on its so-called "dot plot."

Stock sell-off takes key sectors into or near bear markets

Stock sell-off takes key sectors into or near bear markets U.S. stocks fell 2 percent on Friday, extending a recent decline that has threatened to push key sectors and segments of the equity market into bear-market territory as concerns mounted over the health of the global economy. The day’s losses were widespread, with all 11 of the primary S&P 500 sectors in negative territory. According to Bloomberg data, more than half the components of the S&P 500 -- 259 companies -- are now at least 20 percent below their 52-week highs, putting them below the threshold that signifies a bear market. Notably, Friday’s decline took the S&P 500 financial sector 20 percent below a peak reached in late January.

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The week ahead is stacked with events that could prove pivotal for markets , including a flurry of Fed speakers and the G-20 ministers meeting in China. There should also be some important headlines for the oil market when Saudi Arabian Oil Minister Ali al-Naimi speaks at the CERAWeek energy

Trade-war worries and the Fed's interest rate hikes have topped the list of what's scaring risk markets and sending buyers into safe havens like Treasurys. On Friday, stocks plunged after a surprise slowing of consumer and industrial data in China, even though U.S. retail sales were strong and economists upped their outlook for fourth-quarter growth to 3 percent.

But the U.S. economy is expected to grow at a slower pace next year, and the Fed is expected to emphasize its policy decisions will be dependent on data. Economists expect growth to fall from about 3 percent to 2.4 percent next year, according to CNBC/Moody's Analytics rapid GDP update.

"If the Fed sounds overtly too dovish, it sounds like they're trying to appease the equity market. If they end up being too dovish they run the risk of having us wonder what they know that we don't know," said Goncalves.

Patrick Palfrey, equity strategist at Credit Suisse, said the economic outlook and earnings expectations are still solid but the global economy has weakened somewhat and the market has to adjust. "If you look at valuations in the sell-off, what the market is pricing at the moment is a recession, an economic recession or a profit recession. The question is when you look at ISM or the pace of job gains, the question is are they recessionary? And the answer is no," Palfrey said.

Almost half of S&P 500 stocks in a bear market

Almost half of S&P 500 stocks in a bear market The S&P 500 is not yet in a bear market, but nearly half of its components are. Hurt by worries about global growth, the S&P 500 on Monday fell as much as 1.89 percent before reversing course and ending the session with a 0.17 percent gain, trimming its loss so far in December to 4.44 percent. require(["medianetNativeAdOnArticle"], function (medianetNativeAdOnArticle) { medianetNativeAdOnArticle.getMedianetNativeAds(true); }); The S&P 500 index has been in a correction since October, defined by many investors as a drop of 10 percent or more from a high.

Goncalves said the Fed will be careful not to be too fearful about the economy. "The economy is not yet at a point where you can say clearly that we're heading for a downfall," he said.

Besides the Fed in the week ahead, there are a few earnings reports, including Oracle on Monday, Micron and FedEx on Tuesday, and Nike on Thursday.

Economic reports include homebuilders sentiment on Monday, home sales Wednesday and personal income and durable goods Friday.

What to watch

Monday

Earnings: Oracle, Red Hat, Heico

8:30 a.m. Empire State manufacturing

10:00 a.m. NAHB survey

4:00 p.m. TIC data

Tuesday

Earnings: FedEx, FactSet, Darden Restaurants, Micron, Jabil Circuit, Navistar, Worthington Industries

Two-day FOMC meeting begins

8:30 a.m. Housing starts

8:30 a.m. Business leaders survey

Wednesday

Earnings: General Mills, Paychex, Winnebago, Herman Miller, Rite Aid, Pier 1 Imports

8:30 a.m. Current account

10:00 a.m. Existing home sales

2:00 p.m. FOMC statement, projections

2:30 p.m. Fed Chairman Jerome Powell press briefing

Thursday

Earnings: Nike, Walgreen Boots Alliance, Carnival, Sanderson Farms, Actuant, Accenture

8:30 a.m. Initial claims

8:30 a.m. Philadelphia Fed manufacturing survey

Friday

Earnings: Carmax

8:30 a.m. Durable goods

8:30 a.m. Real GDP Q3 final

8:30 a.m. Personal income/spending

10:00 a.m. Consumer sentiment

Costco's stock tanks as grocery competition leads to earnings miss.
Shares of Costco Wholesale dropped 6 percent Friday after the company reporter weaker-than-expected earnings for its first quarter. 

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