Interest-sensitive stocks are on the edge, nervous about the Fed decision at 2 p.m. today. Last month, the Federal Reserve did not change rates. It will likely do the same today.
Financial institutions gained more than 14% in the last month. They are effectively front-running a 2024 rate cut. Fed Chair Powell need only forecast a rate cut for late 2024 or none at all to cause bank shares to sell off.
Watch Citigroup (C) and Bank of America (BAC), whose shares risk falling to the 200-day moving average of $45 and $29, respectively. Regional banks are also at risk of a correction. Watch the S&P Bank ETF (KBE).
Cyclical companies and energy firms are at risk of resuming their downtrend. WTI crude prices fell to lows not seen since June. Markets are pricing a global recession. In the copper sector, Freeport-McMoRan (FCX) is down 14% from its one-year high.
Lithium producer Albemarle (ALB) lost half its value from its high. EV-related metals are in a bear market uncorrelated to interest rates. However, the tight credit conditions hurt EV demand. In the long term, the COP28 Agreement that begins the end of the fossil fuel era would hurt gas-powered vehicle markets. It will increase EV demand in the years to come.
Watch the Lithium & Battery Tech ETF (LIT), Lithium Americas (LAC), and Lithium Americas (Argentina) (LAAC).
