Markets rise cautiously ahead of Fed decision on Wednesday

Dow went up 146 (but off early highs), advancers over decliners 3-2 but NAZ retreated 143.  The MLP index drifted sideways in the 287s & the REIT index stayed even in the 442s.  Junk bond funds hardly budged & Treasuries had a little buying which let yields slip lower (more below).  Oil rose 1+ to 70 & gold was off 2 to 2608 from its record on Fri.

Dow Jones Industrials

A flurry of major central banks will hold monetary policy meetings this week, with investors bracing for interest rate moves in either direction.  The Federal Reserve's highly anticipated 2-day meeting, which gets underway tomorrow, is poised to take center stage.  The central bank is widely expected to join others around the world in starting its own rate-cutting cycle.  The only remaining question appears to be by how much the Fed will reduce rates.  Traders currently see a qtr-point cut as the most likely outcome, although as many as 41% anticipate a ½-point move, according to the CME’s FedWatch tool.  Elsewhere, Brazil's central bank is scheduled  to hold its next policy meeting tomorrow & Wed.  The Bank of England, Norway's Norges Bank & South Africa's Reserve Bank will all follow on Thurs.  A busy week of central bank meetings will be rounded off when the Bank of Japan delivers its latest rate decision at the conclusion of its 2-day meeting Fri.  Policymakers at the Fed have laid the groundwork for interest rate cuts in recent weeks.  Currently, the Fed’s target rate is 5.25-5.50%.  Some economists have argued the central bank should deliver a 50 basis point rate cut in Sep, accusing it of having previously gone “too far, too fast” with monetary policy tightening.  Others have described such a move as one that would be “very dangerous” for markets, pushing instead for the Fed to deliver a 25 basis point rate cut.

It’s a big week for central banks around the world, with a slew of rate moves on the table

Apple (AAPL), a Dow stock, shares slid, after reports that demand for the new iPhone 16 is lower than expected, & down 12% year over year from the first-weekend sales of the iPhone 15 last year, TF Securities analyst Ming-Chi Kuo wrote.  “The key factor is the lower-than-expected demand for the iPhone 16 Pro series,” Kuo addee after compiling data from AAPL's websites on each iPhone 16 model's pre-order sales, average delivery times & shipments before pre-order.  Kuo added that 1 of the “key factors” of lower demand is that the “major selling point, Apple Intelligence, is not available at launch alongside the iPhone 16 release.  Additionally, intense competition in the Chinese market continues to impact iPhone demand.”  Last Mon, AAPL unveiled new versions of the iPhone, AirPods & Apple Watch at an event in California.  Pre-orders for the new iPhones began Fri & launch on Sep 20, but the first Apple Intelligence features for iPhone 16 won't launch until next month, in a beta version.  Analysts at Barclays, JPMorgan & Bank of America also wrote in investor notes that shipping times could translate to lighter demand for the newest iPhone Pro models, compared to last year.  “Based on our conversations with distributors and analysis of pre-order figures on major Chinese e-commerce sites, total pre-order units were down Y/Y within the first couple of days, with a lower pro model mix,” Barclays analysts wrote.  “We heard that pro model units were down double digits on a Y/Y basis, while base and plus models grew Y/Y.”  AAPL stock dropped 6.54 (3%).

Apple shares slide as analysts highlight sluggish iPhone 16 demand

Treasury yields were flat as investors looked ahead to this week's Federal Reserve meeting & interest rate decision.  The yield on the 10-year Treasury was up by less than 1 basis point at 3.655% & the 2-year Treasury yield slipped 2 basis points at 3.557%.  Yields & prices move in opposite directions &1 basis point equals 0.01%.  The Federal Reserve meeting & interest rate decision are top of mind for investors this week, with the central bank's meeting kicking off tomorrow & concluding Wed.  Markets are anticipating a rate cut from the Fed, the first since it began hiking rates in Mar 2022, but uncertainty about how big the reduction will be has been widespread.  Expectations for a bigger 50-basis-point cut have been growing in recent days.  CME Group's FedWatch tool last showed traders pricing in a 61% chance of a 50-basis-point cut & a 39% probability of a 25-basis-point cut, a reversal from the previous week.  The Fed's rate decision will be followed by a post-meeting press conference during which Chair Jerome Powell could provide hints about the further outlook for rates & the economy.  The central bank is also set to publish its latest economic projections on Wed.  Investors will also be watching out for several economic data releases throughout the week, including Aug retail sales data tomorrow, as well as building permit, housing start & existing home sales figures later in the week.

U.S. Treasury yields are flat as investor focus shifts to Fed meeting

Stocks edge higher, but tech names are struggling, ahead of a crucial week dominated by expectations for the Federal Reserve's first interest rate cut in 4 years.  Investors have diverging views amid rising bets that the Fed will opt for a more drastic 50 basis point cut in its monetary policy decision at the end of its 2-day meeting.