• The Dow Jones cracked a fresh all-time high during Monday trading.
• Despite the upside stretch, equities remain tepid overall.
• Investors are buckling down for the wait to Wednesday’s Fed rate call.

The Dow Jones Industrial Average (DJIA) clipped into another record intraday bid to kick off the new trading week. The largest equities on the New York Stock Exchange (NYSE) inched higher on Monday, ahead of Wednesday’s Federal Reserve (Fed) rate call, which is widely expected to be the Fed’s first rate cut since March of 2020.

The Fed kicking off a new rate-cutting cycle on Wednesday is all but a given according to investors, and it now comes down to a debate of how much rather than when. According to the CME’s FedWatch Tool, rate traders are pricing in around 60% odds that the Fed’s first rate cut in over four years will be a 50 bps decline in the Fed funds rate, with the remaining 40% expecting a more demure 25 bps. Rate markets are also pricing in a total of 125-150 bps in cuts by the end of the year, with interest rate traders seeing a roughly 80% chance that the Fed funds rate will hit 400-425 total bps by December 18 versus the current interest rate of 525-550.

US Retail Sales are slated for an update on Tuesday, but the key datapoint that would normally drive some level of volatility is not expected to move the needle this week unless the print comes in wildly out of alignment with forecasts. MoM US Retail Sales growth in August is expected to ease back to 0.2% from July’s 1.0%, while core MoM Retail Sales (excluding automotive purchases) are expected to tick down to 0.3% from 0.4%.