Stock Indices Dip As Fomc Meeting Begins
The Fed began its latest two-day FOMC meeting this morning and there are signs of nerves in the financial markets, with volatility high as we wait for tomorrow’s monetary policy statement.
Tuesday, March 17, 2015 - 00:00
The Dow Jones began the week with triple-digit gains, but has suffered triple-digit losses in the subsequent trading session, a sign of just how swingy prices have been, despite any real market-moving news flow. Also adding to the jumpiness in the market is Friday’s impending quadruple witching.
By early afternoon in New York, stocks were off their lows, though the Dow Jones (-0.57%) and S&P 500 (-0.35%) remained substantially in the red. The NASDAQ 100 crept into positive territory though, gaining 0.05% to 4372.6. Tech-bellwether Oracle ($ORCL) is set to report after the market close tonight.
Economic news has been thin today. The only significant domestic macro report was for the housing sector and it was not good news: housing starts slid to an annualized, seasonally-adjusted rate of 897,000 in February, the lowest it has been since January 2014, and a steeper-than-expected fall from January’s upwardly-revised pace of 1,081,000 units. The negativity of this result was offset to a substantial degree by building permits picking up sharply. Permits grew 3.0% in February to an annualized 1,092,000, some 7.7% higher than the year ago comparison. Though the data is seasonally adjusted, the severity of the winter weather in February is likely to have negatively affected the numbers. Despite this being a transient factor, the weakness will dampen GDP expectations for the first quarter and could well bolster the arguments of doves at the FOMC meeting.
In the FX market, the euro improved for a second successive day, though it was unable to hold above the $1.06 level. EUR/USD was up 0.22% at 1.0590, having been up as high as 1.0651 earlier in the session. USD/CAD was little changed at 1.2771 despite the release of data showing a big decline in Canadian manufacturing sales. Sales sank 1.7% in January, versus a consensus estimate for a 1.2% drop, while December was revised down a touch from +1.7% to +1.6%. Combined with the weakness already seen in volumes of exports, this new report paints a picture of softness for the Canadian economy for the start of 2015. The Bank of Canada has already factored in some weakness arising from lower energy prices for the first half of the year, but more data like today’s report could see another rate cut on the cards.
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