Stock Market Outlook for Thu Sep 19 2024 – Higher Following Fed Rate Cut

Prior Trading Day Summary:

On Wednesday investors got the interest rate cut the majority had hoped for as the Fed cut half a percent. While the majority of investors had expected a half point cut, it still caught many by surprise. Some analysts explained that with the elections just two months away a half point cut should have been expected.  Still, many investors took profits and the day ended slightly lower.

The SPX made a new all-time high of 5689 but ended the day lower by 16 points to 5618 on rising trading volume of 3.7 billion shares.

The NASDAQ fell 54 points closing the day at 17,573. Volume reached 5.7 billion, the highest since last Wednesday. (Sep 11)

Perhaps of most interest was the rally which sent the Dow Jones higher by over 375 points to a new all-time high of 41,981. The day though ended down with al loss of 103 points.

The selling after the Fed’s decision announcement and news conference is not unusual. The “sell the news” crowd is typical after this type of event.

Let’s review the closing technical indicators from Wed Sep 18 2024 to see what to expect on Thu Sep 19 2024.

Stock Market Outlook: SPX Closing Chart For Wed Sep 18 2024

The index closed above the 21 day moving average which is bullish.

The closing candlestick has a long shadow which usually signals weakness on Thursday but still a higher close.

The 21 day moving average is unchanged at 5575. This is neutral.

The 50 day moving average is higher at 5514. This is bullish.

The 100 day moving average is rising and closed at 5409 which is bullish.

The 200 day moving average is in an uptrend and closed at 5189 which is bullish.

The Lower Bollinger Band is above the 100 day moving average and climbing which is bullish.

The Upper Bollinger Band is sturning sideways as a Bollinger Bands Squeeze is now underway.

The S&P chart is more bullish than bearish for Thursday.

SPX Stock Market Outlook review of Wed Sep 18 2024

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Thu Sep 19 2024 

For Thursday investors may see some weakness in the morning but the interest rate is big enough to see investors push stocks still higher. The outlook from the Fed is for further rate reductions into the end of the year. Many analysts believe the Fed will cut anywhere from half a point to three-quarters of a point more, by the end of this year. Unless the economy slows, that will be bullish for stocks.

The technical indicators are a bit mixed as of Wednesday’s close but the majority are pointing to a higher close on Thursday.

Today we get the weekly initial jobless claims. If they are higher than 230,000 the market might stall for a short period. As well, we get home sales which again if they come in stronger than expected could slow any rally today.

Potential Economic and Political Market Moving Events

Monday:

8:30 Empire State manufacturing survey came in much higher than expected at 11.5 versus -4.7 prior.

Tuesday:

8:30 Retail sales rose 0.1% surprising analysts

8:30 Retail sales minute autos slipped further than estimated to 0.1%

9:15 Industrial production rose to 0.8% which was higher than estimates of 0.2%

9:15 Capacity utilization was slightly higher at 78.0%

10:00 Business inventories rose to 0.4%

10:00 Home builder confidence rose to 41 from 39

Wednesday:

8:30 Housing starts for August rose to 1.36 million, well beyond estimates of 1.31 million

8:30 Building permits for August rose to 1.48 million, well ahead of estimates of 1.41 million

2:00 FOMC interest-rate decision announced a half point rate cut

2:30 Fed Chair Powell news conference

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims are expected to dip by 1,000 to 229,000

8:30 Philadelphia Fed manufacturing survey is estimated at -1.1 which is up dramatically from -7.0 prior

10:00 Existing home sales are estimated to slip to 3.9 million from 3.95 million prior

10:00 Leading economic indicators are expected to rise to -0.3% from -0.6% prior