The Market Wants To Believe Today–Rallying Ahead Of The Fed?

As of 2 p.m. New York time U.S. stocks were higher on just about no meaningful news.

To me it looks like the market wants to climb in the very near term–testing technical momentum to move to 2950 on the Standard & Poor’s 500 and maybe beyond.

The “reasons” being hauled out for today’s gains–0.84% on the S&P 500 and 0.69% on the Dow Jones Industrial Average–include a formal withdraw of proposed extradition legislation in Hong Kong (which is supposed to calm the situation there), another defeat for Boris Johnson on meaningless Brexit legislation that looks likely to push the United Kingdom to a snap general election (which I believe that Johnson and his relatively united Conservative Party will win over a very splintered opposition), and some talk from the White House about trade negotiations with China (which doesn’t move the trade talks at all.) By the way, after losing today’s vote Johnson called for an October 15 election. Which turned into another vote he lost.

All this “good news” has sent the dollar lower against the euro and the pound with the Dollar Spot Index falling 0.6%. A falling dollar, I’d note is good for oil prices and U.S. benchmark West Texas Intermediate is up 4.63% as of 2 p.m. New York time

My sense, though, is that traders want to hold on through the Federal Reserve’s meeting on September 18. The hope, of course, is that the Fed will either cut interest rates by 50 basis points (instead of just 25) or say something that suggests more aggressive interest rate cuts at the December meeting.

Fed chair Jerome Powell is scheduled to talk on Friday. Which will also be the day that the August jobs numbers are released. Economists expects very little change from July with the economy adding a projected 160,000 jobs in August after adding 164,000 in July. That would probably keep the unemployment rate at a very low 3.7%.

Powell’s speech will be the last words out of the Fed until after the September 18 meeting of its rate setting Open Market Committee as the central bank will go into its 10-day pre-meeting quiet period beginning on Sunday, September 8.