After getting out to a great start in North American trade today, U.S. stock markets spent the second half of trade falling back down to lower levels.
Most of the decline was attributed to biotech stocks which led the way down and dragged everything else with it. Currencies remained mixed with the U.S. dollar performing every which way as it increased against the Swiss franc, but lost ground against most everything else. As the rest of the week unfolds, quite a bit of attention will be paid toward the Federal Reserve who could have a huge influence in the direction of both equities and the USD moving forward.
On Wednesday of this week, the Fed will be making their monetary policy decision where they are widely anticipated to do virtually nothing. No interest rate hike, no insinuation that they will hike rates soon, no press conference, no projections…nothing. Yeah, they’ll release a statement that may very well be an extremely similar statement to the one they released last time where they appeared to be more dovish than the market anticipated. Considering the recent employment report that was dismal and the expected rough read on GDP hours before the decision is announced, it wouldn’t be surprising to see an even more dovish statement this time around.
As we inch ever closer to that statement release though, investors will be trying to prepare for what it will say. That being the case, there may be some equity buying going on as the Fed is prone to keep interest rates lower for longer than anticipated even scarcely a month ago. Part of that rush to equities started today with the early ramp higher, and more opportunities to jump in could be arising with each pullback. In fact, the drop back in to red territory today brought the Dow down to an ascending trend line that has provided support since last week. If this trend line can continue to prop up this instrument, “Dow at record highs” may be a familiar phrase leading in to and after the Fed releases their statement.