Market Turns Cautious Ahead of Fed Decision

Market Overview

Markets are in wait-and-see mode ahead of the Federal Reserve‘s interest rate decision and key earnings from major tech companies. Investor concerns over stretched U.S. equity valuations outweighed positive trade headlines, pushing all three major indexes lower and ending the S&P 500’s six-day winning streak.

In fixed income, a strong bid at the 7-year Treasury auction drove the 10-year yield down nearly 9 basis points. The U.S. Dollar Index edged up 0.3% amid choppy trading, while gold prices gained modestly. Oil prices surged more than 3% on geopolitical developments, with WTI crude briefly reclaiming the $70/barrel level.

Hot Topics to Watch

• U.S. June JOLTS Job Openings Miss Expectations

• Job openings fell in June after two consecutive months of increases, though overall levels remain stable. The hiring rate eased to 3.3%, the lowest since November last year. Layoffs were little changed and stayed at historically low levels, while voluntary quits declined. Analysts note that this JOLTS report supports the view that the U.S. labor market is gradually cooling, though labor demand remains relatively healthy.

• Biotech and Pharma Brace for a Chill

• Novo Nordisk lowered its constant-currency sales growth forecast from 13%-21% to 8%-14%, and trimmed its operating profit growth outlook from 16%-24% to 10%-16%. The downgrade was driven by weaker-than-expected cash-pay channel sales of its flagship weight-loss drug Wegovy, hurt by “unsafe and illegal large-scale counterfeit products.” Shares tumbled nearly 22% Tuesday, plunging as much as 28% intraday to the lowest since February 2022.

Key Events Ahead (GMT+8)

• 20:10 ET – U.S. July ADP Employment Change (in thousands)

• 20:30 ET – U.S. Q2 Real GDP Annualized (Advance), Q2 Real Personal Consumption Expenditures (Advance), Q2 Core PCE Price Index Annualized (Advance), U.S. Treasury Quarterly Refunding Announcement

• 22:00 ET – U.S. June Pending Home Sales Index (MoM)

• 22:30 ET – U.S. EIA Weekly Crude Oil Inventories (week ending July 25)

Overnight

• 02:00 ET – FOMC Rate Decision

• 02:30 ET – Fed Chair Jerome Powell Press Conference