S&P 500; US Indexes Fundamental Daily Forecast – Trump Speech Fails to Move Markets as Investors Remain Locked in on Fed
U.S. stock indexes rose on Tuesday as the Fed began two-days of monetary policy deliberations and as President Trump delivered a key speech to the United Nations, designed to drum up support for a tougher stance on North Korea.
In the cash market, the benchmark S&P 500 Index settled at 2506.65, up 2.78 or + 0.11%. The blue chip Dow Jones Industrial Average closed the session at 22370.80, up 39.45 or +0.18% and the tech-based NASDAQ Composite finished the day at 6460.82, up 6.18 or +0.10%.
The S&P 500 was led higher by telecommunications and financials. The Dow was led by strong gains in Verizon and Goldman Sachs.
In U.S. economic news, import prices posted their biggest gain in seven months in August amid a spike in petroleum costs. Import prices rose 0.6% versus an estimate of 0.4%.
In the housing industry, building permits came in at 1.30M, beating the 1.22M forecast. Housing Starts were 1.18M, slightly above the estimate.
The current account was a disappointing -123B, however, the previous report was revised to the better at -114B.
The Federal Open Market Committee began its two-day monetary policy meeting, but during the trading session financial market traders shifted their focus to the United Nations, where U.S. President Donald Trump tried to encourage members to confront threats from rogue nations like North Korea.
In a speech before the United Nations General Assembly, Trump said “North Korea’s reckless pursuit of nuclear weapons and ballistic missiles threatens the entire world with unthinkable loss of human life.”
Trump also said, “No nation on Earth has an interest in seeing this band of criminals arm itself with nuclear weapons and missiles. The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea. Rocket man is on a suicide mission for himself and for his regime. The United States is ready willing, and able, but hopefully this will not be necessary. That’s what the United States is all about. That’s what the United Nations is for. Let’s see how they do.”
Despite the tough talk from Trump, the stock market had no response to his speech. This is because most investors feel that a war on the Korean Peninsula seems very unlikely at this time. Investors in China, Japan and South Korea don’t believe there will be a war because they perceive a low potential reward with high risk.
The United Nations likely feels the same way this is why the U.N. Security Council is more likely to continue with strong sanctions like imposing a ban on North Korea’s textile exports and capping its crude oil imports.
Stock market investors were also focused on U.S. Tax Reform. Interest on this topic grew after Senator Bob Corker told reporters that GOP lawmakers had reached a tentative tax reform-budget deal. Once again, the market’s reaction to this news was muted because investors are looking for something more concrete and nobody wanted to take a big position in the market ahead of the Fed.
On Wednesday, stock market investors will be most interested in the details of the Fed’s plan to begin reducing its massive balance sheet and whether the Fed still believes it can raise interest rates in December.
This article was originally posted on FX Empire
