If you're a fan of home run hitters, today is that sort of a day. Every Fed decision day is important, even those in the center of summer. Still, I'm expecting the Fed to give investors a free pass today; in other words, little new information to move markets. The weekly Petroleum Status Report strikes at 10:30 AM. Oil has come a long way and is in need of some run support. New home sales data matters, too, but it will bat a little lower in the order than the heavy hitters. Donald Trump Jr. and Paul Manafort are "interviewing" with a congressional panel today and we're expecting something to leak to the press. Look for volatility to express some concern and equities, too, in the morning, until that 2:00 PM pass by the Fed, when stocks should be relieved to run higher, if I'm right...
Every Federal Open Market Committee (FOMC) meeting matters, even those in the center of summer with no press conference scheduled. However, the Fed typically does not present important changes at times like these, so I'm not expecting anything new from the Fed today. Some are talking about the possibility of the addition of a word to the statement to indicate the Fed will begin reducing its balance sheet "soon." Still, I believe the most likely scenario today is one where the Fed does nothing new, and market relief results from the 2:00 PM release.
This morning's data from the Energy Information Administration (EIA) will matter greatly. Oil prices have come a long way back and could use further support from data here. It's the season for draws from oil and gasoline inventory, as the last several weeks have provided. Still, nothing is guaranteed, and the market, especially energy and related shares, will react to this data.
The American Petroleum Institute (API) data, for what it's worth in prognosticating the EIA data, indicated yesterday a steep crude oil inventory draw of 10.2 million barrels. API reported a build of 1.9 million barrels in gasoline stores. It's very bullish on net, if it translates to the EIA data. The API data led oil prices even higher yesterday after another strong start to the day. I should note here that I saw the OPEC meeting as constructive this week as well.
New home sales data for the month of June is due at 10:00 AM. Economists expect the annual pace of sales to reach 611K for June, up from 610K for May, but I would not be surprised to see more soon. Homebuilders have every incentive now to build, build, build - because demand is there and inventory is not. A positive data point here or soon provides further evidence of a more rapidly expanding U.S. economy, and that serves stocks.
Donald Trump Jr. and Paul Manafort appear before congressmen today, but in a closed door session. Still, I would not be surprised to see the Trump team provide a summary or for information to leak otherwise. This could present some risk today, but I'm not expecting it.
Some heavy hitting earnings data yesterday helped uplift the market. Namely, I point to Caterpillar's (NYSE: CAT) positive outlook that points to a better global picture; that's the economic driver I've been pointing to for further equity market gains, but also for further Fed actions. General Motors (NYSE: GM) too enthused, but provided some concern about the second half.
Today's reporters key on AT&T (NYSE: T) from last evening, and Boeing (NYSE: BA), Coca-Cola (NYSE: KO), D.R. Horton (NYSE: DHI), Facebook (Nasdaq: FB) at the close, Ford (NYSE: F), Goldcorp (NYSE: GG), Norfolk Southern (NYSE: NSC), Northrop Grumman (NYSE: NOC), PayPal (Nasdaq: PYPL), Total S.A. (NYSE: TOT), Tractor Supply (Nasdaq: TSCO) and Whirlpool (NYSE: WHR).
In conclusion, look to the Fed decision, oil inventory data, new home sales news and the interview of Trump Jr. and Manafort to play importantly today, along with earnings. By 2:00 PM, I expect relief post the Fed decision to allow stocks to look to higher ground. For more of my work on the markets, readers are welcome to follow the column here at Seeking Alpha.
Disclosure: I am/we are long USO.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: My position is through options.