Hansen, Mueller Industries director, sells $105,710 in stock
Investing.com - Wells Fargo anticipates the Federal Reserve will implement another 25 basis point interest rate cut at the conclusion of its Federal Open Market Committee (FOMC) meeting on October 29. This comes as the S&P 500, tracked by SPY, trades near its 52-week high of $673.95, with a year-to-date return of 14.35%.
The financial institution does not expect significant changes to the language in the post-meeting policy statement, according to its recent analysis. Wells Fargo predicts Chair Powell’s press conference remarks will reflect his October 14 public statements, emphasizing a gradual move toward neutral policy while acknowledging two-sided risks. With the market’s beta at 1.01, investors closely monitor Fed decisions for potential volatility impacts.
The bank notes potential upcoming changes to the Fed’s balance sheet runoff program, commonly known as quantitative tightening (QT). Wells Fargo maintains its longstanding forecast that the FOMC will announce the end of QT at its December 9-10 meeting, with balance sheet reduction ceasing after December 31.
Wells Fargo acknowledges this December timeline is a "close call" and the Committee might opt to end quantitative tightening at the October meeting instead.
The bank’s analysis suggests the Fed is balancing tensions between employment and inflation goals as it adjusts monetary policy, while markets maintain strong performance with the S&P 500’s P/E ratio at 14.65 and dividend yield at 1.1%.
In other recent news, Deutsche Bank has raised its forecast for S&P 500 third-quarter earnings growth to 10.7% year-over-year, citing a favorable macroeconomic backdrop and robust U.S. economic growth data. The bank also noted additional tailwinds from a strengthening dollar and diminishing impacts from falling oil prices. Meanwhile, Wells Fargo is maintaining its forecast for two additional 25 basis point interest rate cuts by the Federal Reserve before the end of 2025. Despite the ongoing government shutdown, Wells Fargo anticipates these reductions will occur at the October and December meetings this year. In other developments, Deutsche Bank reported that equity positioning has risen to a one-month high, although it remains moderately overweight. Discretionary investors have increased their exposure but continue to hold neutral positioning, with systematic strategy positioning significantly elevated. Additionally, Goldman Sachs has dismissed concerns about the sustainability of AI investment levels, noting that AI applications are demonstrating productivity improvements.
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