Investing.com - Here’s a preview of the top 3 things that could rock markets tomorrow.
1. Fed Statement Will Have Few Signs of Doves
The Federal Open Market Committee is meeting today and tomorrow and will be releasing its statement Thursday.
The market is convinced that the FOMC will keep rates in its range of 2% to 2.25% (92% chance according to Investing.com’s Fed Rate Monitor Tool), just as it’s convinced they will hike in December (84% chance).
There will be no press conference and there’s little chance that the Federal Reserve will change the language in its statement, which suggested further rate hikes with the economy rising at a strong rate in September, to a more dovish stance, even given the October market selloff.
Watch for the statement to rather highlight a pickup in wages and a further drop in unemployment, indicative of an FOMC that’s willing to boost rates past neutral, Diane Swonk, chief economist at Grant Thornton, said in a note.
“The Fed has done a 180 degree turn in its view on inflation,” Swonk said. “What was once a concern that the economy was not warm enough has shifted to worries of overheating. Even former Fed Chair Janet Yellen has adjusted to the new environment, arguing that the risks of overheating and seeing a corrosive rise in inflation are now greater than the threat that disinflation once was.”
2. Bond Yields on the Radar Again
If, as expected, the market gets its affirmation from the Fed that points to steady rate hikes, investors will be looking at bond yields.
Surging yields were a big scapegoat for the October tumble in equities, especially with high-flying companies like Netflix (NASDAQ:NFLX) that are raising a large amount of capital.
The United States 2-year yield climbed today to around 2.96%, around levels not seen since 2008.
The United States 10-year yield was down today, but still up near 3.2%.
The midterms are in the rearview mirror, but politics aren’t. There is already talk of bipartisan cooperation on infrastructure spending, which could buoy stocks but would add more to the deficit, pushing yields even higher.
3. DR Horton Provides a Window to Housing
As a trifecta for economic wonks, earnings from DR Horton (NYSE:DHI) before the bell tomorrow will give more insight into the housing market, the one area of the economy that hasn’t been consistently humming along.
Analysts expect that the homebuilder earned $1.23 per share in the latest quarter on revenue of a little more than $4.5 billion.
The stock took a hit, as most did, in October, but has gained slightly since the end of that month.
Also on the calendar, AstraZeneca (NYSE:AZN) will report numbers and Hain Celestial (NASDAQ:HAIN) weighs in with results.