Where Things Stand in the Market as of Sunday, September 15th, 2024

The market performed a quick recovery last week based on the likelihood that there will as many as 100-125 points of interest rate cuts before year-end. The Federal Reserve meets on Tuesday-Wednesday with an official policy statement due at 2 p.m. ET on Wednesday, and with Fed chief Jerome Powell speaking at 2:30 p.m. ET. While a rate cut is expected, the markets are split on whether the first Fed rate cut will be 25 basis points or 50. Markets have almost fully priced in 100 basis points of cuts by year-end, with over 50% odds of 125 basis points. Of particular importance is the Fed’s updated “dot plot,” which indicates where they think rates are headed, along with economic projections. Investors will pay close attention to Powell’s comments for clues about the pace of future Fed rate cuts. One wild card is the ever-widening war between Russia and Ukraine with Ukraine’s recent military incursion into Russia including a drone attack in Moscow.