U.S. Stock Market

U.S. Stocks Set To Open Higher As Traders Hope For More Support From The Fed

Coronavirus Aid Package Talks Continue

Yesterday, the lack of progress in negotiations between Republicans and Democrats regarding the new round of economic stimulus pushed stocks lower at the end of the trading session.

Today, the talks will continue. Republicans have offered a coronavirus aid package worth $1 trillion while Democrafts favor a much bigger aid package worth $3 trillion.

In addition, Republicans want to cut unemployment benefits from $600 per week to $200 per week as higher benefits discourage people from actively searching for work. Democrats want to continue with $600 weekly benefits for a couple of months.

The stimulus is very important for economic recovery so the market is nervous on any negative news about the ongoing negotiations.

However, S&P 500 futures are gaining ground in premarket trading, suggesting that traders believe that Democrats and Republicans will reach consensus by the end of this week.

Fed Commentary In Focus

Today, the U.S. Federal Reserve will announce its Interest Rate Decision. The rate is expected to stay unchanged so the market will focus on Fed’s commentary.

The Fed is in a challenging situation since a surge in the number of coronavirus cases in the U.S. has put the speed of economic recovery under question.

The Fed has already announced that it will keep its existing emergency lending programs until the end of the year, but traders will be looking for additional signs that Fed will use extra instruments to support the economy.

Fed’s commentary is especially important for the U.S. dollar, which has experienced significant pressure in July. In case the U.S. dollar continues its downside move, we’ll see more upside in gold, silver and mining stocks.

Crude Inventories Suddenly Decline

The recent API Crude Oil Stock Change report showed that U.S. crude inventories declined by 6.83 million barrels.

The report provided support to WTI oil which has recently lacked momentum amid worries that problems on the coronavirus front will put pressure on oil demand.

For oil to have more chance to gain momentum, the increase in inventories should be confirmed by EIA Weekly Petroleum Status report which is due to be published today.

For a look at all of today’s economic events, check out our economic calendar.