Excited for Wednesday: The Fed, GDP, and More Earnings

Includes: DIA, QQQ, SPY
by: Mark Hines

I'm excited for Wednesday. There will be a lot of activity in the markets, and it could well be a major point of inflection. The Fed will likely cut the Fed Funds rate, GDP numbers will be revealed, and earnings announcements will continue. These are all major market moving events, and they could set the tone for many months to come.

For starters, we'll receive GDP Details at 8:30am EST. This is the broadest measure of economic activity, and it will help us determine if we are "officially" in a recession. News like this can significantly impact investor sentiment, and set the tone in the market for quite some time. For example, if we are in a recession this could encourage more investors to move investment dollars to non-US markets (I have a significant portion of my portfolio allocated to emerging markets).

Next, we'll here from the Fed about interest rates at 2:15pm EST. Fed Fund futures are predicting a 25 basis point cut, and many economists are forecasting this will be the last rate cut for a while. Depending on the stance of the Fed, this could be a major inflection point in the market. If this is the last rate cut for a while, then it will likely have a significant impact on commodity prices (i.e. bubble starting to burst), the U.S. dollar (slowing/reversing deflation), and investor sentiment.

On top of GDP numbers and the Fed announcement, we're still in the middle of earnings season. Big name companies like General Motors, Starbucks, and Time Warner, to name a few, will be announcing earnings on Wednesday. This will give investors even more information to react to.

Overall, it should be a very interesting Wednesday...