Top Stories

The top story in the market tomorrow will the Fed’s decision on whether to cut interest rates by 25 or 50bps. The top story in the market the last few days has been the surging odds of a 50-basis point cut being the outcome. This surge as we have chronicled in the Trading Justice podcast this weekend and, in the Tackle Today, has been fueled by an article by Fed Whisper Nick Timiraos from the Wall Street Journal. The man who Jay Powell communicates with the market during Fed blackouts is out with another article ahead of the blackouts.

In the most recent article, the Fed whisper writes that while the Fed usually prefers to move in quarter point increments, it is more complicated this time. The basic logic is with falling inflation and a cooling labor market, a strong argument could be made for a 50bps cut. Many market observers are asking, if Powell simply was going to cut 25bps, why the need for multiple articles out of Timiraos laying out the argument for a 50bps cut? Rate cut odds have jumped as a result.

We will find out tomorrow what the result will be and there is certainly some anticipation heading into the event. Tomorrow in the Tackle Today we will outline what to expect in the two waves of price action that are likely to occur.

Stocks in the News

• Nucor Corp. (NUE) Shares fell as Nucor forecast lower Q3 profits due to reduced steel prices. The company expects Q3 EPS of $0.87-$0.97 and adjusted EPS of $1.30-$1.40. Lower selling prices are impacting Nucor’s steel-mill business performance.
• Intel (INTC) Stock jumped 3% on plans to make its foundry business independent. Intel also announced a deal with AWS for custom AI chips. This restructuring is part of CEO Pat Gelsinger’s strategy to revitalize the company.
• Microsoft (MSFT) Shares rose 2% after increasing its quarterly dividend by 10.7% to $0.83 per share. The tech giant also approved a new $60 billion share buyback program. The new dividend is payable on December 12.
• SolarEdge Technologies (SEDG) Stock recovered its earlier losses, erasing the gap down that followed Jefferies’ downgrade to underperform. The initial concerns about rising competition and high inventory levels appear to have been offset by renewed investor confidence.
• AppLovin (APP) Shares surged 5%, continuing a five-day winning streak. UBS recently upgraded the stock to buy from neutral, highlighting AppLovin’s strong execution in the gaming sector and potential in the e-commerce market.
• Dell Technologies (DELL) Stock is attempting to reverse its recent downtrend after Mizuho Securities initiated coverage at outperform. The firm emphasized Dell’s strong position in AI servers and robust supply chain, which has allowed the company to gain market share.

Economic Reports

In the last major economic report before the Fed announces their policy decision tomorrow, retail sales numbers were released this morning. It was the second month in a row that the retail sales print beat expectations although core retail sales were slightly lower.

• Retail Sales Month-over-Month: 0.1% versus – 0.2% expectations
• Core Retail Sales Month-over-Month: 0.1% versus 0.2% expectations

The real economic story this morning continues to be increasing odds of a 50bps cut at tomorrow’s Fed meeting which hit as high as 70 percent this morning.

Next 24 Hours

The Fed will release their decision at 2:00 PM EST tomorrow and we will find out whether it will be a 25bps or a 50bps cut. Jay Powell’s press conference will follow 30 minutes later. There will be two waves of price action and we will break it all down in the Tackle Today tomorrow.

Have a fantastic Tuesday.  

S&P 500 (SPY)

As markets price in a 50bps cut, it is not surprising to see a lot of healthy charts out there. Whether the S&P 500 holds its breakout or this move results in a fake out will largely be determined in the short-term on whether we get a 25bps or a 50bps cut tomorrow.