On the other hand, technology stocks and the Nasdaq strengthened ahead of Alphabet (NasdaqGS: GOOGL) earnings report.
“This week is going to be critical to see the passing of the baton from the Fed being the primary driver of the market to corporate fundamentals,” Matt Miskin, senior capital markets research analyst at John Hancock Investments, told Reuters.
Analysts have raised their projections for S&P 500 earnings to 8.8%, compared to an 8% increase expected at the start of July, according to Thomson Reuters.
“For now, better earnings is giving the market the ability to navigate some of the uncertainty that is coming out of Washington. But going into next year, the market is likely to become more concerned if policies do not finally come through,” Miskin added.
The Federal Reserve is also slated to meet this week. While economists don’t expect a change in the Fed funds target rate, the central bank could reveal plans to reduce its trillion dollar balance sheet.
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