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U.S. Stocks May Continue To Benefit From Rate Cut Optimism

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With the Federal Reserve's monetary policy announcement looming, stocks may move to the upside in early trading on Tuesday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 137 points.

Stocks may continue to benefit from optimism that the Fed will strike a dovish tone in its statement announcing its latest monetary policy decision on Wednesday.

The Fed is widely expected to leave interest rates unchanged but could signal plans to cut rates as soon as its next meeting at the end of July.

Optimism about a potential rate cut has helped to prop up the markets ever since Fed Chairman Jerome Powell pledged to act "as appropriate" to support the U.S. economic expansion.

President Donald Trump has been urging the Fed to lower rates and may ramp up pressure on the central bank after European Central Bank President Mario Draghi suggested he could provide additional stimulus.

Noting the subsequent drop in the value of the euro against the U.S. dollar, Trump called Draghi's comments "unfair" to the U.S., adding, "They have been getting away with this for years, along with China and others."

On the U.S. economic front, a report released by the Commerce Department showed new residential construction in the U.S. unexpectedly decreased from an upwardly revised level in the month of May.

The Commerce Department said housing starts slid by 0.9 percent to an annual rate of 1.269 million in May from an upwardly revised April estimate of 1.281 million.

Economists had expected housing starts to edge up to 1.239 million from the 1.235 million originally reported for April.

Meanwhile, the report said building permits rose by 0.3 percent to an annual rate of 1.294 million in May from a downwardly revised 1.290 million in the previous month.

Building permits, an indicator of future housing demand, had been expected to come in unchanged compared to the 1.296 million originally reported for April.

Buying interest was somewhat subdued, although stocks still managed to end Monday's trading mostly higher. The tech-heavy Nasdaq outperformed its counterparts after underperforming last Friday.

The major averages gave back ground going into the close but remained in positive territory. While the Nasdaq climbed 48.37 points or 0.7 percent to 7,845.02, the Dow edged up 22.92 points or 0.1 percent to 26,112.53 and the S&P 500 inched up 2.69 points or 0.1 percent to 2,889.67.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday, although Japan's Nikkei 225 Index bucked the uptrend and slid by 0.7 percent. Hong Kong's Hang Seng Index jumped by 1 percent, while China's Shanghai Composite Index inched up by 0.1 percent.

The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index has surged up by 1.2 percent, the German DAX Index is up by 1.6 percent and the French CAC 40 Index is up by 1.8 percent.

In commodities trading, crude oil futures are rising $0.19 to $52.12 barrel after sliding $0.58 to $51.93 a barrel on Monday. Meanwhile, after dipping $1.60 to $1,342.90 ounce in the previous session, gold futures are jumping $13.70 to $1,356.60 an ounce.

On the currency front, the U.S. dollar is trading at 108.25 yen compared to the 108.54 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1198 compared to yesterday's $1.1218.

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