Gold prices were off to the races in recent floor trading, up $68 at first, then extended that rally with a further $45. Reacting strongly to continuing uncertainties in the economy, investors are on edge. So they’re keeping a watchful eye on the developments in Federal Reserve policy and the signs from the global economy. As the market opened, the Dow futures were up 35 points. At the same time, the S&P 500 closed up just 1 point. The Nasdaq Composite was the laggard, taking a step back to close down 3 points. In other news, the broad Russell 2000 index dropped by 4 points.
Markets jittery as investors adjust to possible imminent changes to monetary policy from the Federal Reserve. These ups and downs in the commodities and futures markets speak to this larger fear. Oil prices dropped dramatically plunging by $2.50 or 4.2% on the day to close at $58.50. This precipitous drop in oil prices further complicates an already dangerous and volatile market environment.
The debate on future interest rates has recently become a bit more contentious. At present, market speculation points to a 50-basis point cut becoming a real possibility. This positive speculation comes just ahead of the Federal Reserve’s blackout period, which starts on December 2nd. In this quiet period, Fed officials cannot make any public remarks about the monetary policy before their next meeting. Whatever the path forward ends up being, the prospect of that first rate cut holds great promise for investors navigating today’s confusing economic reality.
The yield on the 10-year Treasury note rose and fell in dramatic fashion. It moved up from 3.95% to 4.14% before finally coming back down to rest at 4.07%. This volatility in bond yields illustrates the market’s sensitivity to potential changes in interest rates as investors weigh their options amid shifting economic conditions.
Boston Federal Reserve President Suzy Collins, for one, is in favor of holding interest rates where they are. She urges a wait and see approach to any further monetary easing. This position is in direct contrast to the emerging Wall Street discussion regarding a deep July rate cut. It underscores the gap in expectations that continues to exist between Fed officials and market participants.
NVIDIA’s (NVDA) next quarterly report is due out on November 19th. Investors have been eagerly awaiting it, looking for it to attract a tidal wave of attention. The technology industry is still a spotlight on Capitol Hill for good reason, as it adjusts to new demand/supply equation in the post-COVID era.
Along with the domestic news, global economic indicators are very much front and center right now. The Eurozone Industrial Production comes later today. Analysts will be watching closely to judge its effect on Euro-wide market sentiment, while judging the health of the European economy which continues to face strong headwinds.
With U.S. futures still churning, traders will be looking for any clear indication as to which way the wind is blowing in this more uncertain economic climate. The recent U.S. government shutdown has illuminated and complicated our current discourse around fiscal policy. In 2015, then–former President Trump estimated that it would cost $1.5 trillion.