All eyes on the Fed as markets stall ahead of rate announcement

investmentnews.com:

Global equities struggled on Wednesday as investors braced for more policy-tightening from the Federal Reserve, even as results from some of the biggest European and American companies hinted at a softening economy. 

The European benchmark fell, snapping six days of gains. LVMH slumped as much as 4.5%, dragging the luxury-goods sector lower, after Europe’s biggest company provided further evidence of a slowdown in spending by wealthy consumers in the US. Miners underperformed after Rio Tinto Group reported a drop in first-half profit, driven mainly by fading demand from China. On the plus side, Rolls Royce Holdings Plc surged as much as 25% after the engine maker boosted profit guidance.

Nasdaq 100 index futures were under pressure after disappointing results from some top constituents. Microsoft Corp. slipped as much as 3.9%, having posted tepid sales growth and forecasting a slowdown in its cloud-computing business, while social media firm Snap Inc sank 19%. Google’s parent Alphabet Inc. however, jumped more than 7% after posting forecast-beating revenue. Meta Platforms Inc. rose almost 2% ahead of its own report later Wednesday.

“We are going to see some deceleration in corporate earnings, deceleration in economic growth, softening of demand, all of this will have a higher impact on equities,” Aarthi Chandrasekaran, director of investments at Shuaa Asset Management said on Bloomberg TV. Still, “the US economy is weakening but it’s not weakening enough to price in a full rate cut next year,” he said.

Hopes of a soft landing for the US economy were bolstered Tuesday by a consumer confidence index hitting a two-year high, suggesting also that policymakers aren’t done with their inflation fight yet. Later on Wednesday,