By Barbara Kollmeyer, MarketWatch
We’ll find out later — maybe — if there’s any meat on the bone of Tuesday’s stock rally that will see more to come today after the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.16% was left just 1% away from a fresh record close.
While ECB President Mario Draghi got that rally rolling with some unexpectedly dovish comments and fresh hopes on a U.S.-China trade deal carried it further, few are expecting the Fed to send stocks into the stratospheres by announcing any policy change on Wednesday afternoon. But they do expect Fed Chairman Jerome Powell to drop biggish hints about at least one interest cut by year-end.
If he doesn’t, well, maybe you can kiss the Dow’s best June return in 80 years goodbye. After all, we’ve had Aussie and EU central banks caving this week, it’d be rude for the Fed to go rogue right?
Well, caution seems the byword among some bank strategists, who were summing up the action after Tuesday’s close. Among them, David Lebovitz, global market strategist, at J.P. Morgan Asset Management, who provides our call of the day with caution that this steady stream of good news for markets may have an expiry date.
“I don’t necessarily understand the thesis behind bad news being good news and a Fed cut providing further support for the market,” Lebovitz told CNBC’s “Closing Bell” market wrap Tuesday
He acknowledges that some economic survey data has been softer -- the New York Fed’s Empire State business conditions index was pretty dire for June. But hard data hasn’t really rolled over yet, he said. An example of that would be recent retail sales data that was viewed as pretty healthy.
“Something needs to give at the end of the day. You can’t have this impossible trinity of resolution on trade, easy Fed and moderate economic growth. One of those things is going to have to fall by the wayside at some point,” Lebovitz said.
We’ll know the outcome of the Federal Open Market Committee meeting at 2 p.m. Eastern Time, followed by a press conference with Powell at 2:30 p.m. (Preview here). Ahead of that, Dow /zigman2/quotes/210598065/realtime DJIA 0.00% , S&P /zigman2/quotes/210599714/realtime SPX +0.16% and Nasdaq-100 /zigman2/quotes/210598365/realtime COMP +0.26% are inching up for Wednesday.
Oil is also down, along with gold and the dollar /zigman2/quotes/210598269/delayed DXY +0.02% . The Turkish lira /zigman2/quotes/210561895/realtime/sampled USDTRY -0.1021% is taking a hit after reports the U.S. is weighing new sanctions.
Europe stocks /zigman2/quotes/210599654/delayed XX:SXXP +0.38% are steady, while Asia was in rally mode on trade-deal hopes, with the Hang Seng /zigman2/quotes/210598030/delayed HK:HSI -1.76% gaining 2.4%.
A bout of extremely wet weather has been making life hellish for farmers trying to plant corn crops in the U.S. And as corn is used to make ethanol, prices of both have been higher on shortage fears, points out Commerzbank in a note to clients.