All eyes set on Fed meeting
U.S. stocks ended mostly higher on Tuesday, 18 December 2018 in a turbulent session. The Dow Jones Industrial Average and the Nasdaq Composite managed to squeeze out some modest gains, yet they also finished well off their best levels of the day.
The Dow Jones Industrial Average advanced 83 points, or 0.4%, to 23,678. The Nasdaq Composite finished higher by 0.4% to 6,784. The S&P 500 was mostly unchanged at 2,546.
The S&P 500 sectors were mixed with consumer discretionary and real estate on the winning end, and energy and consumer staples on the losing end.
Reviewing Tuesday's economic data, which included Housing Starts and Building Permits for November, the Housing Starts and Building Permits Report for November wasn't as strong as the headline figures suggested, as it featured little to no growth in both permits and starts for single-family units. Total starts increased 3.2% to a seasonally adjusted annual rate of 1.256 million units (consensus 1.230 million), yet starts for single-family units declined 4.6% to 824,000, which is the lowest since May 2017. Total permits increased 5.0% to a seasonally adjusted annual rate of 1.328 million ( consensus 1.270 million), yet permits for single-family units were up just 0.1% to 848,000. The key takeaway from the report is that it substantiates the weakening levels of homebuilder confidence and is a reflection of the impact rising interest rates are having on single-family construction activity.
The Fed is widely expected to raise interest rates for the fourth time this year at its two-day policy meeting ending on Wednesday, a factor generally favorable for the dollar and negative for gold, but such a move has long been expected in financial markets. Market expectations for 2019, once put at three to four more increases, have also begun to lessen on the back of dovish comments from Fed officials, including Chairman Jerome Powell. The Fed will be joined by the Bank of Japan and the Bank of England in offering policy updates this week.
More From This Section
In company news, shares of Boeing are up 4% after the airplane manufacturer late-Monday announced a dividend increase and a share-buyback program.
Market participants are largely expecting the FOMC to raise the target range by 25 basis points to 2.25% to 2.50%. What remains a pertinent source of uncertainty is what the Federal Reserve will do with its interest rate projections and possibly its balance sheet normalization effort.
Bullion prices ended on a mixed note on Tuesday, 18 Dec 2018 at Comex. Gold prices on Tuesday marked a modest gain, enough to notch their highest finish in five months, finding some support on a weaker dollar ahead of a monetary policy update this week from the Federal Reserve.vTraders eagerly awaited the central bank's decision on interest rates, as well as hints on the Fed's pace for next year's expected rate increases, when it issues its latest outlook for monetary policy on Wednesday.
Gold for February delivery on Comex edged up by $1.80, or 0.1%, to settle at $1,253.60 an ounce. The contract has gained about 2.2% month to date. March silver fell 5.8 cents, or 0.4%, to $14.701 an ounce.
The ICE U.S. Dollar Index was down slightly Tuesday as gold futures settled, with a week-to-date decline of 0.4%. A weaker U.S. unit typically boosts demand for commodities priced in dollars as it makes them less expensive to users of other currencies.
Crude oil futures tumbled on Tuesday, 18 December 2018 with a more than 7% loss sending benchmark U.S. crude prices to their lowest finish in nearly 16 months, as concerns over a potential global supply glut rattled the market. Losses for oil intensified in late-morning dealings after it was reported that Russia was increasing its output to 11.42 million barrels a day this month.
January West Texas Intermediate crude dropped $3.64, or 7.3%, to settle at $46.24 a barrel on the New York Mercantile Exchange. Bearish momentum has been consuming investors for weeks and much may be riding on a two-day Federal Open Market Committee meeting that began Tuesday.
Key weekly data on U.S. petroleum supplies will be released on Wednesday by the EIA. Market expect the government agency to report a decline of 3 million barrels in crude supplies. The survey also forecast a supply rise of 2.6 barrels for gasoline and a decline of 900,000 barrels for distillates.
Looking ahead, investors will receive the FOMC Rate Decision for December, Existing Home Sales for November, the weekly MBA Mortgage Applications Index, and the Current Account Balance for Q3 on Wednesday.
Powered by Capital Market - Live News