The market is sometimes bemusing. Everyone has been assuming the Federal Reserve will raise rates finally this December the past few weeks. Today Janet Yellen kept walking towards that…. and the market acted surprised. Indexes were mixed most of the session and then fell off hard in the last 2 hours. The S&P 500 fell 1.10% and the NASDAQ 0.64%. Oil falling through $40 also seemed to pressure indexes.
Federal Reserve Chair Janet Yellen said on Wednesday she was “looking forward” to a U.S. interest rate rise that will be seen as a testament to the economy’s recovery from recession.”Given past rhetoric, the fading of financial market instability and Chinese concerns, and generally robust U.S. domestic data, her likely goal will be to elevate the market’s expectation for a December rate hike from just above 70 percent to close to 90 percent. In this way, the Fed will manage to avoid too much disruption on the Dec. 16 decision day,” RBC Global Asset Management Chief Economist Eric Lascelles said in a note.
In economic news the “Beige Book” said economic activity grew at a modest pace in most regions. The Fed said consumer spending increased in nearly all districts while the manufacturing sector remained mixed, under continued pressure from the strong dollar, low commodity prices and weak global demand.
“I just think (the Beige Book) another nail in the coffin in terms of a rate hike this month,” said Peter Cardillo, chief market economist at First Standard Financial.
Keep in mind the European Central Bank meets tomorrow and most expect more easing.Continue reading