Fed Decision On Interest Rates Has Markets On Edge

The Federal Reserve could impact the financial markets in a major way today.  The Janet Yellen era really begins now. The Federal Reserve could decide to raise interest rates for the first time in nine years, and the markets are watching, as investors focus on whether the Federal Open Market Committee will do what many are expecting.

“Traders are clearly sitting on the fence until the Fed’s announcement,” David Madden, IG market analyst, said in a note. “Fear of hawkish commentary in the press conference after is keeping the buyers at bay. No change to the interest rate has been heavily priced in, but the dealers know deep down what the U.S. central bank is drifting toward, and that is holding them back from buying.”

Futures for the Dow Jones Industrial Average fell 22 points to 16,642 and those for the S&P 500 dropped 3.5 points to 1,984.50. Futures for the Nasdaq-100 index slipped 4.75 points to 4,376.25.

The FOMC’s statement is set to come at 2 p.m. Eastern Time, at the conclusion of the policy makers’ two-day meeting.

Ahead of the announcement is economic data that may determine the outcome of the decision. Initial jobless claims declined slightly to 264,000. August housing starts fell about 3 percent.

Take into account the impact of the decision has politically. President Obama is telling everyone who will listen how well the economy has done since he was sworn in. A rate hike could affect that “momentum” significantly in the short term and the long term ahead of a suddenly competitive 2016 Presidential Campaign.

Globally markets are mixed in anticipation of the decision.

China’s Shanghai Composite index fell 2.10%, while Hong Kong’s Hang Seng slipped 0.51% and Japan’s Nikkei added 1.43%.

Over in Europe, the Euro Stoxx 50, which tracks large-cap companies in the eurozone gained 0.26%. Germany’s Dax gained 0.31%, France’s CAC 40 added 0.28%, while the UK’s FTSE 100 declined 0.26%.

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