US stocks opened with mixed ups and downs on Monday. The Federal Reserve will hold a monetary policy meeting this week, and the market generally expects the agency to keep interest rates unchanged. Investors are evaluating the possibility that inflation will rise due to the UAW strike and the risk of the US federal government shutdown.
As of press release, the three major stock indexes have had mixed ups and downs.$Nasdaq Composite Index(.IXIC.US)$Decreased by 0.06%,$S&P 500 Index(.SPX.US)$Decreased by 0.12%,$Dow Jones Industrial Average(.DJI.US)$Decreased 0.13%.
Goldman Sachs recently published a bullish report on artificial intelligence concept stocks, saying that the sector still has more room to rise.
Peter Oppenheimer, the bank's chief global equity strategist, said in the report: “There is no bubble in artificial intelligence, and few analysts worry about growing interest in the AI market (mostly technology stocks).”
The analyst said that this technology will completely change the world, that artificial intelligence stocks have more room to rise, that the technology is still in its early stages, and it is expected that more achievements will be achieved in the future.
The focus of this week's Fed meeting was on. The Federal Reserve will hold a monetary policy meeting this Tuesday, announce the results of the meeting on Wednesday, and then Fed Chairman Powell will hold a press conference.
The market generally expects the agency to keep interest rates unchanged. Traders hope to have a deeper understanding of the Fed's future position on inflation from the Fed meeting statement and Powell's speech.
Quincy Krosby, chief global strategist at LPL Financial, said, “For interest rate expectations for November and December, it is critical how the Fed sends out information on suspending interest rate hikes. However, for financial markets, the most important thing is whether the Fed showed a dovish or hawkish trend when it issued a signal to suspend interest rate hikes.”
According to CME Group's FedWatch tool, the market currently expects the Fed to announce a high probability of keeping interest rates unchanged this Wednesday as high as 99%, and a 31% chance of raising interest rates in November.
Goldman Sachs believes that as inflation and the labor market continue to cool down, it is unlikely that the Fed will raise interest rates again in November. Goldman Sachs analysts said in a report released over the weekend that it is likely that the Fed will continue to skip raising interest rates.
Goldman Sachs analysts said, “Regarding November, we think further rebalancing of the labor market, better news on inflation, and a possible slowdown in economic growth in the fourth quarter will convince more participants that the FOMC can abandon the last rate hike this year. We think it will eventually do so.”
The recently released inflation data is generally in line with economists' expectations. Although the Producer Price Index (PPI) announced last week exceeded expectations, the core PPI excluding food and energy was in line with expectations. Furthermore, last week's consumer price index (CPI) for August was also slightly higher than expected, up 0.3% from the previous month, and market expectations were 0.2%.
However, Krosby believes that given that the labor market remains strong, prices are likely to continue to rise in the future.The strategist said the general strike launched by the United Auto Workers (United Auto Workers) may put more upward pressure on prices.
UAW recently rejected the 21% salary increase proposed by automobile manufacturer Strantis. The strike has now entered its fourth day, and no solution has yet been found. The four-day work system has become the highlight of the trade union's new demand. Companies say this means they need to hire 25% more workers.
Krosby said, “Given that the UAW strike is likely to win a decent pay package for workers, and that workers have recently successfully negotiated, which supports the prospects for widespread wage increases, this will make the FOMC face the possibility of rising prices.”
Furthermore, some analysts pointed out that rising health-care costs make it difficult for the Fed to achieve its goal of reducing the inflation rate to 2%.
Inflation in the US has slackened sharply from a 40-year high of 9.1% in mid-2022, and has been helped by a surprising source: falling health-care costs.
But this situation is coming to an end, in large part because of the complex way the federal government is trying to calculate rising health-care costs. Another acceleration in health-care costs could complicate the Fed's efforts to reduce inflation to 2% or less before the pandemic.
Economist Omair Sharif, founder of research firm Insights, said, “Unfortunately, the relevant bill is about to expire. It's going to give the Fed even more of a headache.”
The market is still concerned about the risk of a US federal government shutdown. According to calculations by the US Congressional Budget Office (CBO), during the shutdown in 2019, the US economy permanently lost 3 billion US dollars. Now, as it seems increasingly likely that another round of shutdown will arrive just 13 days later (midnight on September 30), the risk that this shutdown will be more costly is also increasing day by day.
On Sunday evening local time, US House Speaker and Republican Kevin McCarthy announced a request to postpone the deadline for the US government shutdown (October 1) by one month, including temporarily cutting expenses of US domestic institutions by 8% and resuming construction of the border wall.
McCarthy presented this plan to Republican lawmakers on a conference call on Sunday night. Earlier, negotiators representing the main factions of the Republican Party in the House of Representatives agreed on a request to temporarily fund the government for 31 days. The House of Representatives is scheduled to vote on the measure on Thursday (September 21).
These demands also include provisions that restrict immigrants from applying for asylum in the US, which most Democrats abhor, and which are unlikely to be accepted by the Democratic-led Senate. That means the bill won't reduce the risk of a government shutdown. The bill also does not include additional emergency war funds or disaster aid for Ukraine, including relief for victims of the Maui wildfires and the Florida hurricane, which President Biden's administration has requested.
McCarthy was immediately opposed by some extreme conservatives in the Republican Party, which could cause the plan to fail. Six far-right lawmakers quickly announced their opposition to the proposal. In the absence of support from the Democratic Party, McCarthy's proposal can only be passed if at most four Republican lawmakers oppose it.
Individual stocks in focus
The trend of star technology stocks is divided,Tesla fell about 3%, Nvidia fell nearly 2%, Apple rose more than 1%, and Amazon and Google rose slightly.
Most of the popular Chinese securities firms have declined.Ideal Auto fell nearly 4%, JD fell more than 2%, and Ali and NIO fell more than 1%.
$Apple(AAPL.US)$It has risen by more than 1%. Guo Mingyi called for strong demand from Apple. It is expected that iPhone 15 shipments will still exceed 80 million this year.
$Arm Holdings(ARM.US)$Down nearly 6%, Bernstein gave the company a low rating.
$Nikola(NKLA.US)$Surging nearly 18%, the company will partner with trailer manufacturer ITD Industries to expand its heavy truck dealer network to Canada.