Stocks are little changed as traders debate how big the Fed’s anticipated rate cut will be: Live updates

Oil prices are down nearly 1% with an expected interest rate cut by the Federal Reserve unlikely to provide much in the way of support.

“In theory a rate cut is supportive for oil prices but we’ve seen prices rallying in recent days, likely pricing this in already, hence the response may be muted,” said Matt Smith, lead oil analyst for the Americas at Kpler.

Though a quarter-point cut is likely already priced into the oil market, prices could rise a bit if the Fed makes a bigger move today, said Andy Lipow, president of Lipow Oil Associates.

“A 50 basis point cut is slightly supportive of the oil market since it translates into a weaker dollar and stronger prices for dollar denominated commodities,” Lipow said.

The oil market has been more focused on a looming supply and demand imbalance. Consumption is softening in China as OPEC+ plans to increase production in December.

“We are not expecting fireworks in the sky following Fed rate cuts,” said Manish Raj, managing director of Velandera Energy Partners. 

“The Fed action is unlikely to suddenly spur demand, which has otherwise been soft,” Raj said. “Nobody is hitting the gas stations just because the Fed decides to cut the rates today.”

— Spencer Kimball

BTIG isn’t feeling too optimistic about equities heading into the Federal Reserve meeting this afternoon.

“There are some viewpoints that it doesn’t matter if they go 25 or 50, as long as the dot plot shows 100bps by year-end,” BTIG analyst Jonathan Krinsky said in a Tuesday note. “We tend to agree with that, but also think the setup for a ‘false breakout’ remains high regardless of [today’s] meeting. It’s also highly unusual to be this close to a meeting with this much uncertainty.”

Krinsky noted that the S&P 500 hit a marginal new all-time high on Tuesday before pulling back. “Whether we make another run at the highs or not, we feel the risk-reward in the near-term is now skewed to the downside,” he said.

One sector that will face significant downside risk, according to the analyst, is consumer staples.

— Pia Singh

The S&P 500 started Wednesday’s trading session flat.

The broad market index ticked up just 0.01%. The Nasdaq Composite rose 0.2%, while the Dow Jones Industrial Average slipped 50 points, or 0.2%.

— Hakyung Kim

Former Federal Reserve Vice Chair Richard Clarida expects the central bank Wednesday to lower interest rates by a quarter percentage point, less than market expectations.

In a CNBC interview, Clarida, who is now a managing director and global economic advisor at bond giant Pimco, said the debate will be less about the recent weakness in the labor market and easing inflation but rather about where things are headed further in the future.

“We’re sticking with our call for 25” basis points, he said during a “Squawk Box” interview. “The Fed needs to be setting rates today based on where it thinks inflation and the labor market is going to be in six to 12 months, and so I’m not really all that sympathetic to behind the curve, July vs. September.”

—Jeff Cox

Housing starts and building permits increased at a faster than expected pace in August, the Census Bureau reported Wednesday.

Privately owned starts totaled a seasonally adjusted 1.356 million for the month, a 9.6% increase from the downwardly adjusted July total and better than the 1.31 million Dow Jones estimate.

On permits, the total of 1.475 million showed an increase of 4.9% from the upwardly revised July figure and topped the forecast for 1.41 million.

—Jeff Cox

Check out some of the companies making headlines in premarket trading.

• United States Steel — Shares advanced more than 3% after Reuters reported the Committee on Foreign Investment in the United States granted a request to push back a review of Nippon Steel’s bid for U.S. Steel until after the November election. Reuters cited a person familiar with the matter.
• General Mills — Shares were 1% lower after profit for the packaged foods company dropped 14% last quarter on lighter margins due to higher input costs.
• Casella Waste Systems — Stock in the recycling company pulled back more than 4% after it announced plans for a $400 million equity offering of its Class A common stock.

Read the full story here.

— Brian Evans

The options market shows that traders expect a sizable move for the stock market on Wednesday, according to Goldman Sachs.

John Marshall of the firm’s derivatives research team said in a note to clients that market pricing suggests traders expect a move in equities that is roughly in line with recent Federal Open Market Committee decision days but still higher than a typical trading session.

“Options imply a +/-1.1% move in S&P 500 for the 18-Sept FOMC meeting; this compares to an average of +/-1.2% move priced into SPX ahead of FOMC meetings since the beginning of 2022. Arguably, this is an unusually important FOMC meeting due to the expected start of a cutting cycle,” the note said.

— Jesse Pound

Traders expect the Fed to lower rates and end the rate hiking cycle that began in March 2022. Take a look at how the S&P 500 has fared on Fed decision days since then.

European markets opened lower on Wednesday as investors digested key data from the region and looked ahead to the U.S. Federal Reserve’s monetary policy decision.

The pan-European Stoxx 600 was down 0.08% in early deals, with sectors and major bourses diverging. Mining stocks shed 0.69% while insurance added 0.46%.

— Karen Gilchrist

BlackRock and Microsoft shares moved slightly higher in overnight trading after announcing their participation in a group to raise up to $100 billion to develop data centers and power infrastructure for AI.

The companies will be part of a group known as Global AI Infrastructure Investment Partnership, which will target pulling together $30 billion of initial capital.

— Samantha Subin, Jordan Novet