Daily Stock Market Report: Fed Rate Decision, Market Outlook, and Top Stocks for September 2024

Daily Stock Market Report: September 16, 2024

Top Stock Market News

1. Futures Steady Ahead of Fed Rate Decision

   • Stock futures remained steady in the early hours of September 16, as investors awaited the much-anticipated Federal Reserve's interest rate decision later in the day.
   • The Dow, S&P 500, and Nasdaq futures were trading relatively flat, with traders cautiously monitoring the Fed's moves to combat persistent inflation.
   • The markets are pricing in a high probability of another rate hike, with the focus shifting to the central bank's forward guidance and economic projections.

2. Fresh Highs Predicted, but Volatility Expected in Late September

   • According to Goldman Sachs' trading desk, the stock market is expected to reach record highs in the next four weeks, followed by a potential downturn in the second half of September.
   • The firm's head of equity derivatives strategy, John Rubner, noted that the low volatility markets typically observed during the end of summer weeks are bullish for stock prices.
   • However, Rubner anticipates a period of negative volatility in the latter part of September, although he still expects the stock market to end the year at record highs.

3. Stocks Tumble on FedEx Warning

   • US stocks closed sharply lower on Friday, with the Dow Jones Industrial Average suffering its worst week of the year, after FedEx issued a gloomy profit warning and withdrew its full-year guidance.
   • The logistics giant's warning exacerbated concerns about the health of the global economy and heightened fears of a potential recession.
   • In the bond market, the benchmark 10-year Treasury note yield surpassed 3.46%, while the 2-year Treasury spiked to its highest level since 2007, reaching 3.9%.

4. Tech Rally Fuels Stock Market Surge

   • US stocks rallied on Wednesday, with the Nasdaq Composite surging as investors cheered the Federal Reserve's decision to hold interest rates steady and a tech revival.
   • The S&P 500 rose nearly 1.6%, while the Nasdaq Composite jumped over 2%, led by gains in technology giants like Nvidia, which soared 12%.
   • Investors welcomed the Fed's pause on rate hikes and the central bank's acknowledgment of the resilience in the economy, despite the ongoing battle against inflation.

Top Stocks to Watch

1. Delek Logistics Partners (DKL)

   • Delek Logistics Partners, a company that owns, operates, acquires, and constructs crude oil and refined products logistics and marketing assets, has witnessed an increase in the Zacks Consensus Estimate for its current year earnings.
   • The stock has a strong buy rating and is considered an attractive income stock for investors.

2. Opera Limited (OPRA)

   • Opera Limited, a company that provides web browsers and the AI-driven content discovery platform Opera News, has been added to the Zacks Rank #1 (Strong Buy) List.
   • The stock is viewed as a promising investment opportunity due to its strong fundamentals and growth potential.

3. Boeing (BA)

   • Boeing, one of the largest US defense contractors and a leading supplier of commercial aircraft, is among the best stocks to buy now, according to Forbes Advisor.
   • The company's strong order backlog and improving demand for commercial aircraft make it an attractive investment option.

4. Kraft Heinz (KHC)

   • Kraft Heinz, a global consumer packaged food and beverage company with popular brands like Kraft, Heinz, Oscar Mayer, and Maxwell House, is another top stock pick for September.
   • The company's defensive nature and stable cash flows make it an appealing investment choice in uncertain economic times.

5. Occidental Petroleum (OXY)

   • Occidental Petroleum, one of the largest US oil and gas exploration and production companies, is expected to benefit from the ongoing strength in energy prices.
   • The company's strong portfolio and robust cash flow generation make it an attractive investment opportunity in the energy sector.

Stock Market Expected Movement

Based on the available information and expert opinions, the stock market is expected to witness the following movements in the near future:

• Short-Term Rally: Goldman Sachs' prediction of record highs in the next four weeks aligns with the generally bullish sentiment surrounding the market. Low volatility and anticipation of a potential rate hike pause could fuel a short-term rally.

• Volatility in Late September: However, the anticipated negative volatility in the second half of September, as warned by Goldman Sachs, could lead to a market downturn or correction. Investors should brace for increased turbulence during this period.

• Year-End Gains: Despite the potential volatility in September, Goldman Sachs and other analysts remain optimistic about the stock market's performance for the remainder of the year, forecasting record highs by the end of 2024.

• Sector Rotation: While the tech sector has recently led the rally, investors should monitor sector rotations as economic conditions evolve. Defensive sectors like consumer staples and energy may gain momentum in the face of economic uncertainties.

• Fed's Guidance Crucial: The Federal Reserve's forward guidance and economic projections will play a pivotal role in shaping market sentiment and movements. Investors should closely follow the central bank's communication and adjust their strategies accordingly.

Overall, the stock market is expected to navigate a complex landscape of potential rate hikes, economic uncertainties, and sector rotations. Investors are advised to remain vigilant, diversify their portfolios, and closely monitor market developments to make informed investment decisions.