Fed actions this month could be ‘eventless’ for asset prices, says Ameriprise
The upcoming Federal Reserve meeting in September, where the central bank is expected to raise interest rates, is likely already priced into the market, according to Ameriprise chief market strategist Anthony Saglimbene.
“In our view, central bank actions this month are likely a non-event for asset prices,” he wrote in a Monday note. “However, incoming economic data over the coming weeks and months and their influence on political actions next year could play a much bigger role in guiding stocks over the medium term..”
Markets now expect the Fed to hike rates by 0.75 percentage points, meaning assets may not move much if that is the central bank’s decision. A consumer price index report on Tuesday that comes in line with expectations also might not move the needle.”
“Unless last month’s inflation numbers change significantly more than expected, including Wednesday’s update on August’s producer price index (PPI), we believe a rise of 75 basis points from the Fed is essentially stuck at this point,” he said.
Relief rally is likely a bear market bounce, says Wells Fargo
According to Wells Fargo, the recent relief rally in equities is likely another bear market bounce and investors should position themselves for more turmoil to come.
“Year-do-date, the outperformance of defensive, high-return, high-quality, low-valuation stocks reminds investors of the hallmark of a bear market,” wrote Chao Ma, global portfolio and investment strategist. , in a Monday note.
Such reversals occur in nearly every bear market and many are quickly reversed, leaving investors with regrets, they added.
“While it is difficult to predict the bottom of a bear market, in the past, market bottoms were generally preconditioned by overly pessimistic market sentiment and a sign of definite improvement in the economic or undervalued market problem. underlying,” Ma said. “We don’t think we’re there yet either way.”
In the meantime, Ma recommends investors look for defensive stocks with low volatility, high dividends and buyback yields. He also says that investors should go for high-quality names with leading profitability and market share and an affordable market price.
US stock futures rise ahead of Tuesday’s CPI report
U.S. stock futures were up Monday night as Wall Street eagerly awaits the August consumer price index report due out Tuesday morning. The report will give investors an update on the inflation situation in the United States and is one of the last data the Federal Reserve will see before its September meeting.
Dow Jones Industrial Average futures gained 55 points, or 0.17%. S&P 500 and Nasdaq 100 futures rose 0.18% and 0.21%, respectively.