This week, it’s all about the central banks, and monetary policy-watchers will have their plates full with decisions on deck from the US, UK, Russia and Japan.
Here is what investors will be watching in the days ahead:
It’s that time of year, again — Federal Open Market Committee policymakers are set for their once-every-two-months powwow in Washington on Wednesday to decide whether to raise interest rates for the second time this year. Analysts fully expect them to do so — although some on Wall Street have expressed their doubts about whether economic conditions — including softness in first-quarter GDP growth and stubbornly slow inflation, even as unemployment remains low — fully support its charge forward.
The real focus will be on Fed chair Janet Yellen’s press conference following the meeting. She is likely to give some insight into how the Fed perceives the mixed bag of economic readings and whether that will knock the central bank off of its expected path for the year.
There could also be some adjustments on tap for the Fed’s inflation or unemployment projections in light of recent data. And, more importantly, Ms Yellen may offer some insight on the Fed’s plans for starting to reduce the size of its $4.5tn balance sheet, which bank officials have been teasing for several months now. The biggest question analysts are asking is whether that plan gets debuted at the September meeting or if central bankers would prefer to wait until December.
UBS economists offered this to help read the tea leaves next week:
S&P down but limited. Dow ends the day up. ROTATION.
The stock market rotated out of the high flying tech stocks.
- The Nasdaq reached an all time high earlier in the day, but the afternoon saw the market tumble. The high reached 6341.695. The low 6137.67 – a range of over 200 points. That is huge. The index is settling at 6207.92, down -113.85 or -1.80%. For the week, the index declined by -1.55%.
In the other major indices:
- The S&P fell -2.02 points or 0.08%. For the week the index was down -0.30%
- The Dow closed higher up 89.44 points or +0.42%. For the week the Dow was up 0.31%.