Uncertainty is Sinking the Stock Market. Can FOMC Minutes Help?
Uncertainty is Sinking the Stock Market. Can FOMC Minutes Help?
By:Ilya Spivak
Fed meeting minutes and Nvidia (NVDA) earnings are in focus after Wall Street takes another beating.
- Stock markets suffered yet another blow as uncertainty derailed risk appetite
- October Fed meeting minutes now in focus as traders hope for some steering
- A disappointment seems to loom, but NVDA earnings may delay a reckoning
Stock markets continue to buckle amid broad-based selling pressure, with a 0.78% decline in the bellwether S&P 500 marking the fourth consecutive day of losses. The tech-tilted Nasdaq 100 shed 1.14% and suffered its sixth straight day in the red. Those amount to the longest losing streaks in three months for the top Wall Street benchmarks.
Bitcoin and gold prices managed an intraday bounce to close with modest gains after the former touched levels unseen since April and the latter probed toward the bottom of November’s trading range. Treasuries were little changed, keeping interest rates in familiar ranges along the yield curve.
Fed meeting minutes in focus as confusion plagues the markets
A deep sense of uncertainty still seems to be forcing traders into a defensive posture. That remains clearly on display in Federal Reserve monetary policy expectations. The markets now see the probability of a cut in December at 48.9%, and of a hold at 51.1%. This almost 50/50 split says traders do not have confidence about what is likely next.
This week’s first major test of this unhappy status quo now comes in the guise of minutes from October’s fateful meeting of the Federal Open Market Committee (FOMC). That conclave marked the top for US stocks after Fed Chair Jerome Powell used the occasion to forcefully push back against the inevitability of a December rate cut.
Powell cited “strongly differing views” about how to proceed after the Fed issued back-to-back rate cuts in September and October. Those were “risk management cuts [and] that’s not the case going forward,” he explained. “What do you do if you’re driving in the fog? You slow down,” Powell mused.
Stocks are in trouble if uncertainty keeps traders in defensive mode
That seems to be aimed squarely at the pause in economic statistics amid the latest US government shutdown. “We don’t know what data we will have in December,” the Fed Chair reasoned. “If there is a significant change in the economy, we will pick that up.” In other words, officials are reluctant to do anything absent an obvious emergency.
Despite recent weakness, the markets do not seem to be flashing the kind of warning signs that would spur the central bank into crisis mode. As for the data, it will be limited at best. September’s jobs report will arrive at last this week, but it seems unlikely that the Fed will get its usual toolkit reassembled by the December 10 policy meeting.
On balance, that might make the meeting minutes’ release a frustrating affair, leaving traders without much more of a steer on how to position in the weeks ahead. That might keep markets under pressure, though conviction may be limited at first as traders wait to get on the other side of an earnings report from AI darling Nvidia (NVDA).
Ilya Spivak, tastylive head of global macro, has over 15 years of experience in trading strategy, and he specializes in identifying thematic moves in currencies, commodities, interest rates and equities. He hosts Macro Money and co-hosts Overtime, Monday-Thursday. @Ilyaspivak
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