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What Does the Rate Cut Mean for Markets?

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What’s in Today’s Report:

  • What Does the Fed Rate Cut Mean for Markets?
  • Which Market Sectors Benefit from the Rate Cut?
  • FOMC Decision Takeaways

Futures are sharply higher as Biden, the more business and market friendly Democratic candidate, had a strong showing on “Super Tuesday” while the coronavirus outbreak fueled further optimism for more stimulus globally.

COVID-19 cases have topped 93K with a death toll over 3,100.

HPE was the latest company to cut 2020 guidance due to the coronavirus while the Caixin China Services PMI fell from 51.8 in January to a record low of 26.5 in February, also citing the virus outbreak as the primary reason for the weakness.

Looking into today’s session, there are two economic reports to watch: The ADP Employment Report will hit first (E: 170K), but then, more importantly, the ISM Non-Manufacturing Index (E: 55.1) is due out shortly after the open and it could be a major catalyst for further gains (if it is good) or more volatility (if is badly misses expectations).

Lastly, the St. Louis Fed’s Bullard will speak twice today (11:00 a.m., 6:30 p.m. ET) and any indication on the Fed’s future policy plans could also have a significant influence on markets with the coronavirus outbreak still being closely watched by investors.

Tom Essaye Quoted in MarketWatch on March 2, 2020

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Investors may be hoping a March rate cut stops the bleeding in the stock market, but Sevens Report’s Tom Essaye said Friday that another rate cut might be a bearish signal for the economy.

“While this is a fairly unique situation that the markets have rarely seen in the past, especially in the age of high-frequency trading houses and 24 hour, instant news sources, if the Fed does indeed cut rates in the coming months as the markets are pricing in, then it will mark…” Essaye said. Click here to read the full article.

Tom Essaye Headshot

Tom Essaye Quoted in Seeking Alpha on September 17, 2019

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The consensus expects a 25 basis-point rate cut from the Fed today, but “the drama is centered on just how…” says Tom Essaye of The Sevens Report. Click here to read the full article.

Tom Essaye Headshot

What the Fed Rate Cut Means for Markets

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What’s in Today’s Report:

  • FOMC Takeaways (Resistance at 3000 in the S&P 500 Getting Stronger)
  • Oil Market Update (Inventories and latest from Saudi Arabia)

Futures are slightly lower as markets digest a “not as dovish as wanted” Fed decision after a generally quiet night.

The market’s reaction to the Fed meeting is one of mild disappointment as the FOMC did not guarantee more rate cuts, although they signaled they will come if needed.

Economic data was sparse overnight as British Retail Sales met expectations and that number’s not moving markets.

Today there are several notable economic reports, including (in order of importance): Philly Fed (E: 11.3), Jobless Claims (E: 214K), Existing Home Sales (E: 5.375M) and Leading Indicators (E: 0.1%).  The Bank of England is also out with a rate decision this morning but no change is expected.

But, the most important event of the day is the start of the lower level U.S./China trade talks, and any positive “chatter” from these meetings should help stocks offset mild Fed disappointment.

Tom Essaye Quoted in Fox Business on June 5, 2019

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Markets are urging the Fed to cut interest rates. Will it listen? “That is a very clear message that the bond market believes interest rates are too high,” Tom Essaye, the founder of Sevens Report Research, told FOX Business. Click here to read the full article.