We’ll find out later — maybe — if there’s any meat on the bone of Tuesday’s stock rally that will see more to come today after the S&P 500 SPX, +0.97% was left just 1% away from a fresh record close.
While ECB President Mario Draghi got that rally rolling with some unexpectedly dovish comments and fresh hopes on a U.S.-China trade deal carried it further, few are expecting the Fed to send stocks into the stratospheres by announcing any policy change on Wednesday afternoon. But they do expect Fed Chairman Jerome Powell to drop biggish hints about at least one interest cut by year-end.
If he doesn’t, well, maybe you can kiss the Dow’s best June return in 80 years goodbye. After all, we’ve had Aussie and EU central banks caving this week, it’d be rude for the Fed to go rogue right?
Well, caution seems the byword among some bank strategists, who were summing up the action after Tuesday’s close. Among them, David Lebovitz, global market strategist, at J.P. Morgan Asset Management, who provides our call of the day with caution that this steady stream of good news for markets may have an expiry date.
“I don’t necessarily understand the thesis behind bad news being good news and a Fed cut providing further support for the market,” Lebovitz told CNBC’s “Closing Bell” market wrap Tuesday
He acknowledges that some economic survey data has been softer -- the New York Fed’s Empire State business conditions index was pretty dire for June. But hard data hasn’t really rolled over yet, he said. An example of that would be recent retail sales data that was viewed as pretty healthy.
“Something needs to give at the end of the day. You can’t have this impossible trinity of resolution on trade, easy Fed and moderate economic growth. One of those things is going to have to fall by the wayside at some point,” Lebovitz said.
Read: Investors haven’t been this bearish since the financial crisis, says Bank of America
Opinion: Dividend stocks, hot this year, may get hotter thanks to the Fed
The markets
We’ll know the outcome of the Federal Open Market Committee meeting at 2 p.m. Eastern Time, followed by a press conference with Powell at 2:30 p.m. (Preview here). Ahead of that, Dow YMU19, +0.09% S&P ESU19, +0.02% and Nasdaq-100 NQU19, +0.08% futures are flat after Tuesday’s rally.
Oil CLN19, +0.00% is also down, along with gold GCQ19, -0.20% and the dollar DXY, -0.11% The Turkish lira USDTRY, +0.5525% is taking a hit after reports the U.S. is weighing new sanctions.
Europe stocks SXXP, -0.06% are steady, while Asia was in rally mode on trade-deal hopes, with the Hang Seng HSI, +2.56% gaining 2.4%.
The chart
A bout of extremely wet weather has been making life hellish for farmers trying to plant corn crops in the U.S. And as corn is used to make ethanol, prices of both have been higher on shortage fears, points out Commerzbank in a note to clients.
Our chart of the day from Commerzbank shows how corn and ethanol have been climbing:
The buzz
Facebook’s FB, -0.29% crypto offering is getting pushback from lawmakers who want the social-media group to hold off until regulators can look it over. Meanwhile, Glassdoor’s top CEO survey finds Facebook CEO Mark Zuckerberg is less loved than before.
Amid trade tensions, Apple AAPL, +2.35% is thinking about moving 15% of 30% of its output from China to Southeast Asia, the Nikkei Asian Review reports. Meanwhile, Harley-Davidson HOG, +1.22% says it’s teaming up with a China manufacturer to make small motorbikes.
Read: How Akerna got to its rock-solid Nasdaq debut
The quote
“A vote for any Democrat in 2020 is a vote for the rise of radical socialism and the destruction of the American dream.” — That was President Donald Trump, kicking off his 2020 election campaign in Orlando, Florida late Tuesday, with jabs at former rival Hillary Clinton and a promise to cure cancer.
Random reads
In rare op/ed Chinese President Xi Jinping has some praise for North Korea
Trump says no apology for the Central Park Five accused of rape of New York jogger in 1989
San Francisco ready to ban all vaping to get young people to stop
Instagram couple’s Africa dream trip crowdfunding effort gets icy response from internet
Yet more tourists go to Dominican Republic and get sick.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.