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US Markets Stuck in First Gear Ahead of Fed


Today's financial recap and tomorrow's financial outlook.


US markets grinded sideways ahead of Wednesday's highly-anticipated Federal Open Market Committee rate decision.

The S&P 500 (SPX) finished 0.3% lower at 2074.20 as a late-day rally couldn't squeeze the index into the green.

However, equity investors embraced risk to some extent, as the NASDAQ Composite and Russell 2000 finished up on the day.

Additionally, the biotechnology sector displayed serious relative strength for the third straight day, with the iShares Nasdaq Biotechnology ETF (IBB) rising an impressive 0.6%.

US economic data continued its losing streak today.

February housing starts fell 17%, missing the -2.4% consensus by a significant margin. On the plus side, Building permits rose 3%, beating the 0.5% consensus.

The Citi Economic Surprise Index, which measures trends in the strength of economic data releases, fell to -72, a level not seen since 2011.

In keeping with the recent trend driven by the strong US dollar, mommodities were weak today, with crude oil falling 1.7% to $43.13. Gold fell 0.5% to $1147.80.

Europe was sluggish after a very strong Monday, with the German DAX falling 1.5% to 11980.80. The German ZEW survey of investor confidence was 54.8, missing the 59.4 reading expected by economists.

Asia was comparitively better. The Nikkei 225 rose 1% after the Bank of Japan said it would continue expanding its monetary base by 80 trillion yen per year. The BoJ also kept its 2% inflation target in place.

China's Shanghai Composite rose 1.6% after the People's Bank of China cut seven-day reverse-repo agreement rates to 3.65% from 3.75%. Over the weekend, China's Premier Li Keqiang vowed to take action to keep the Chinese economy on track in the face of a GDP slowdown. 

Tomorrow's Financial Outlook

All eyes will be on the FOMC's rate decision and economic projections, which will be released tomorrow at 2:00 p.m ET. In particular, traders are looking for clues on the timing of interest rate hikes, and will be watching for the removal of the word "patient" from the Fed's language.

That would signal a June rate increase.

Overseas, we will see Bank of England Meeting Minutes, as well as Great Britain employment, Swiss ZEW Sentiment, and New Zealand GDP numbers.

Fedex (FDX) reports earnings before the open.

Twitter: @T3Live

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