Amidst a tense atmosphere, the Australian and Japanese markets experienced a downturn on Wednesday. Investors are holding their breath in anticipation of the FOMC rate decision. Adding to the market’s unease is the performance of the yen, which has had a tumultuous beginning to the week, with suspected interventions occurring as early as Monday. Currently, the yen is hovering around the 157.7 mark when paired against the U.S. dollar, a level that market participants will be watching closely as these events unfold.

This morning London’s FTSE 100 index saw a modest increase, standing out in a quiet European market landscape, as most markets were closed in observance of the May Day/Labor Day public holiday. Despite the regional pause, investors have their work cut out for them, with the U.S. Federal Reserve’s impending interest rate announcement looming large.

US futures indexes declined Wednesday morning. The focus of traders is now shifting to the Federal Reserve’s interest rate decision. Investors are keenly awaiting insights from Fed Chair Jerome Powell regarding the conditions necessary for a potential rate decrease in the future.

Earnings Calendar

Notable reports for Wednesday before the bell include MA, AER, ALKS, APA, ARCC, ADP, AVA, AVT, AXTA, BLCO, BRY, TECH, BIP, CDW, GIB, CHEF, CLH, CNDT, CTS, CVS, DAY, DD, EL, EXTR, GRMN, GNRC, ROCK, GSK, GPN, IDXX, JCI, KKR, KHC, LTH, LIVN, MAR, NBIX, NCLH, OGE, PSN, PFE, PPL, RGEN, SMG, SLGN, SDHC, SR, STGW, COCO, TRN, TTMI, WLK, WING, & YUM. After the bell include ACHC, AFL, ALB, ALKT, ALL, AFG, AIG, AWK, ANSS, CAR, ACLX, CAR, ACLX, AXS, BALY, BZH, BV, CHRW, CWH, CVNA, CF, CWAN, CDE, CTSH, CRK, CTVA, CCRN, CW, DVN, DGII, DASH, EBAY, NVST, EPR, EQC, ETSY, EXPI, FSLY, FSLR, FRSH, GKOS, GRBK, THG, HTLF, HLF, HST, HPP, INFA, JAZZ, KMPR, KN, KLIC, MRO, MET, MTG, MGM, MCW, MPWR, MOS, MUSA, NFG, NSA, NTGR, PGRE, PAYC, PPC, PCOR, PTC, QRVO, QCOM, RDN, RYN, RSI, RHP, SDGR, SFM, NOVA, TTEK, UGI, UPWK, VMI, VTR, VICI, WOLF, & ZG.

Economic Calendar

News & Technicals’

In a significant move, the Biden administration has announced the cancellation of over $6.1 billion in student loans, affecting approximately 317,000 former students of The Art Institutes. This decision comes after the U.S. Department of Education’s investigation into the for-profit education chain and its parent company, the Education Management Corporation (EDMC). The investigation revealed that both institutions engaged in “pervasive and substantial” deceptive practices, misleading students about crucial factors such as employment rates, potential salaries, and the effectiveness of career services post-graduation. As a result of these findings, all eligible borrowers will automatically receive debt forgiveness. This relief extends even to those who have not formally applied for loan forgiveness under the borrower defense program, ensuring that all affected individuals are covered by this unprecedented act of financial reprieve.

In a landmark shift, the Biden Administration is set to reclassify marijuana as a Schedule III controlled substance, aligning it with drugs such as Tylenol with codeine, anabolic steroids, and testosterone. This groundbreaking decision, as reported by NBC News citing four informed sources, marks the end of marijuana’s over 50-year designation as a Schedule I drug—a category it shared with substances like heroin and methamphetamines. The reclassification reflects a significant change in the federal stance on marijuana, acknowledging its medical benefits and lower potential for abuse. Concurrently, this news has sparked a notable upswing in cannabis-related stocks, which stood out with gains in contrast to the overall market’s downturn.

The Federal Reserve appears to be in a state of inertia, with expectations set for this status quo to be evident at the conclusion of its meeting on Wednesday. Market analysts predict virtually no possibility of the Federal Open Market Committee (FOMC), which is responsible for setting the central bank’s monetary policy, to alter the current interest rates. The most noteworthy announcement anticipated from the meeting is the Federal Reserve’s plan to decelerate the reduction of its bond holdings on the balance sheet. This move signals a cautious approach by the Fed amidst economic uncertainties, as it opts to maintain a steady course rather than introducing new monetary policy changes.

Anticipate a turbulent trading day filled with significant earnings and economic reports, culminating with a FOMC rate decision. Traders should brace for potential sharp swings in points as they respond to the influx of data. Additionally, it’s wise to monitor bond yields closely for any shifts that may occur following comments from Fed Chair Jerome Powell later today, which could offer hints at the market’s future trajectory.

Trade Wisely,

Doug