TLDR
- The Federal Reserve is expected to raise interest rates by 25 basis points Wednesday, with futures markets pricing in an 80% to 85% chance of a hike
- August retail sales data drops Wednesday morning, which could further shape rate expectations
- Oil prices topped $100 a barrel after drone attacks shut a Saudi pipeline, adding to inflation concerns
- The 10-year Treasury yield climbed close to 5%, putting pressure on stocks and rate-sensitive sectors
- Salesforce’s Dreamforce conference kicks off Tuesday with Anthropic CEO Dario Amodei listed as a speaker
The Fed meeting is the main event for Wall Street this week. The Federal Open Market Committee begins its meeting Tuesday and will announce its rate decision Wednesday at 2 p.m. ET.
Markets are pricing in roughly an 80% to 85% chance of a 25 basis point rate increase. That shift came after strong jobs data and inflation figures stayed above the Fed’s 2% target.
The Consumer Price Index rose 3.4% year over year in August, matching July’s reading. Wholesale inflation also came in hotter than expected, as measured by the Producer Price Index.
Fed Chair Kevin Warsh will hold a press conference at 2:30 p.m. ET Wednesday. Investors will be watching closely for any hints about future rate moves.
A single hike may not rattle markets too much on its own. But if Warsh signals more hikes are coming, tech stocks and rate-sensitive sectors could come under pressure.
The 10-year Treasury yield climbed close to 5% last week. That rise has already been a headwind for stocks, particularly high-growth technology companies.
Retail Sales and Oil Add to the Equation
Before the Fed decision, the Census Bureau will release August retail sales data at 8:30 a.m. ET Wednesday. Spending fell 0.6% from June to July without adjusting for inflation.
Strong consumer spending could actually work against stocks. It may give the Fed more reason to keep raising rates.
Weak numbers could ease bond market pressure but raise concerns about whether high costs are hurting households. Either way, Wednesday is shaping up to be the most volatile session of the week.
Oil prices are another factor to watch. Crude surged above $100 a barrel, pushed higher by Middle East tensions.
A key Saudi pipeline carrying around 4 million barrels per day was shut after drone attacks. That supply disruption could keep energy prices elevated for some time.
High oil prices add to inflation, which complicates the Fed’s job. Energy stocks could benefit, while airlines and consumer businesses may face rising costs.
Dreamforce and Earnings on the Calendar
Salesforce kicks off its Dreamforce conference on Tuesday. CEO Marc Benioff will lead the main keynote from 1 p.m. to 3 p.m. ET, with a focus on AI collaboration.
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Anthropic CEO Dario Amodei is listed as a Dreamforce speaker. It is unclear whether he will appear during Benioff’s keynote or at a separate session.
Salesforce is also holding an investor and analyst session at the conference Wednesday at 4 p.m. ET.
On the earnings front, homebuilder Lennar reports Wednesday after the market closes. High mortgage rates have made housing a tough environment, so its new orders and outlook will be closely watched.
Carnival reports Thursday and could give investors a read on consumer travel demand. Weekly jobless claims and the Philadelphia Fed Manufacturing Index are also due Thursday.
The broader market ended last week in the red. The Dow Jones Industrial Average fell 1.6%, and the S&P 500 remains up around 12% for the year.
The Fed’s tone on future rate moves will likely matter more than Wednesday’s decision itself.
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