Indices mark time waiting for the Fed

Indices are unchanged ahead of this week's critical earnings and economic reports. Traders remain cautious ahead of tech earnings reports and a set of critical economic data scheduled for release ahead of next week’s highly-anticipated meeting of the Federal Reserve.

Wall Street watches data for rate hike signs

Wall Street remains obsessed by how the Federal Reserve that will be impacted by host of upcoming data releases: durable goods orders data for March released on Wednesday; weekly jobless claims data on Thursday; a first-quarter gross domestic product, also scheduled for Thursday; and Personal Consumption Expenditures (PCE) inflation data on Friday.

The market currently expects the Fed to raise its benchmark interest rate another 25 basis points to push it above 5% on May 3, but traders will be more interested in any wording in the policy statement or the press conference afterwards that might signal the Fed’s intentions past the upcoming meeting.

Trend economic growth, manufacturing in recession

• Analysts expect this week's GDP data to show that the economy grew at a 2% pace, consistent with recent data, but the manufacturing sector remains in a recession
• The Chicago National Activity Index for March, a weighted average of 85 existing economic data points, came in at -0.19, equal to the previous month, suggesting that the economy was growing at slightly below trend levels
• The three-month moving average is 0.01, suggesting that the economy overall grew at trend levels in the first quarter
• The Dallas Fed manufacturing index for April came in at -23.4, below analyst expectations of -11.5, and down from -15.7 the previous month, with negative readings indicating contraction

Indices, Dollar unchanged

• At the time of writing, the broad S&P 500 index was unchanged at 4,129 while the tech-heavy NASDAQ was down -0.6% at 12,000
• The VIX, Wall Street’s fear index, edged up to 17.2
• The dollar index was flat at 101.4, with major cross rates unchanged
• Yields on 2- and 10-year Treasuries fell to 4.14% and 3.51%, respectively

Oil higher, Gold unchanged

• Gold prices were unchanged at $1,994 per ounce
• Crude oil prices rose 1.0% to $78.6 per barrel
• The grain and oilseed sector was mixed

Ukraine counter-offensive gears up

• Ukrainian forces long-anticipated spring counter-offensive got under way, with forces establishing a foothold on the east side of the Dnipro River near Kherson
• A retired British army officer told reporters to be prepared for a “big bang” attack to disrupt the current stalemate in the war, with Ukraine forces bolstered with newly acquired ground and air equipment support from contributing NATO members
• Confidence is declining that the Ukraine grain initiative will be extended in its current form, which means that we could see it start to wind down in the next 10 days, with ships wanting to make the round trip in and out of Ukraine ports prior to May18

China missteps on the world stage

• China finds itself starting the week by trying to re-establish relationships with the European Union, hoping that it will stay out of the fray with Taiwan, while continuing to establish stronger trade ties
• Josep Borrel, an EU foreign affairs representative, called on the EU navy to begin patrolling the Taiwan Strait
• China also had to do damage control following comments by ambassador Lu Shaye that seemed to question the sovereignty of Ukraine and other former Soviet states
• China had to walk back the statements and declare that Ukraine and other former Soviet states do have autonomy

Analysis by Arlan Suderman, Chief Commodities Economist

Contact: Arlan.Suderman@StoneX.com