This week ahead || Sep 18th - Sep 22nd 2023
Here's some news for the week ahead.
Fed decision, FedEx earnings, and the UAW strike: What to know this week
The Federal Reserve's upcoming policy decision will take center stage in the week ahead, with the central bank set to release its latest policy decision on Wednesday at 2:00 p.m. ET, followed by a press conference with Fed Chair Jerome Powell at 2:30 p.m. ET. Investors expect the FOMC to hold its benchmark interest rate steady in a range of 5.25%-5.5%. The question surrounding the meeting is less about what the Fed does in September and more about policy decisions later this year. Analysts will closely watch the Summary of Economic Projections (SEP), which includes Fed officials' forecasts for inflation, economic growth, and future interest rates. The last dot plot released in June showed policymakers projecting an additional rate hike in 2023. Investors will also monitor the United Auto Workers strike, which could impact production at automakers Ford, GM, and Stellantis. Additionally, rising energy prices could affect earnings projections for companies with oil as a significant cost.
Some banks see new cracks forming in a resilient US consumer
Some U.S. banks are noticing a divergence in the financial health of their retail customers, particularly among lower-income individuals. Executives from Wells Fargo, Fifth Third Bancorp, and Capital One have reported credit deterioration, declines in savings, and spending slowdowns among this segment of customers. Lower-income renters, in particular, seem to be struggling, with some experiencing liquidity levels at or below pre-pandemic levels. This trend comes as the U.S. economy faces challenges such as slowing job and wage growth, the resumption of student loan payments, and tightening borrowing conditions. While overall savings levels remain slightly above pre-pandemic levels, lower-income customers are nearing their pre-pandemic savings levels. Banks are becoming cautious about consumer lending as credit card delinquencies have been on the rise since 2021. While the U.S. consumer has shown resilience so far, uncertainties about the future are mounting, including the possibility of prolonged high interest rates and rising oil prices.
California sues oil giants for downplaying risks posed by fossil fuels
The state of California has filed a lawsuit against major oil companies, including Exxon Mobil, Shell, Chevron, BP, and ConocoPhillips, accusing them of downplaying the risks of fossil fuels and causing tens of billions of dollars in damages. The lawsuit alleges that these energy companies deceived the public and seeks to hold them accountable for climate-related disasters in the state. The American Petroleum Institute, an industry trade group, is also named as a defendant in the case. This legal action is part of a broader trend of states and municipalities in the United States filing lawsuits against the fossil fuel industry for its role in contributing to climate change. The American Petroleum Institute responded, stating that climate policy should be decided by Congress, not the courts. Shell expressed a similar sentiment, emphasizing that the courtroom is not the appropriate venue to address climate change.
Dow Jones Futures: What To Do After Latest Market Shift; Fed Meeting Ahead
The stock market rally saw little change last week, with major indexes ending mixed. Software stocks, which had been strong, tumbled after Oracle and Adobe reported disappointing earnings. The Federal Reserve is set to meet on September 19-20, with expectations of no immediate interest rate hikes, but its projections and Fed Chair Jerome Powell's press conference will be closely watched. Some notable stocks include Tesla and Google parent Alphabet, holding in buy areas, while Meta, Microsoft, and Amazon retreated. The market remains choppy and uncertain, making it a risky time for new investments. Investors should focus on readiness for the next uptrend rather than forcing new trades.
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