The Federal Reserve meets this week for its second-to-last meeting of the year. While Janet Yellen has alluded to a 2015 rate hike, recent market data has many speculators skeptical about the increase occurring in October. For the year, U.S. market index returns have been flat with the Standard & Poor's 500 up 0.71% led by gains from the consumer discretionary sector. Meanwhile, the Dow Jones Industrial Average is down 0.97% year-to-date led by losses from Walmart (WMT, Financial).
An increase to the federal funds rate would likely boost stock returns for U.S. equities as many have teetered in recent weeks over the lack of Fed action. However, while the Fed has indicated that substantial improvements have occurred in the U.S. economy warranting a rate increase in the near future, recently slowed employment data has raised questions on the economy’s progression overall.
In a recent interview with CNBC, John Silvia of Wells Fargo (WFC, Financial) discussed the current data that the Fed is grappling with and why the timing might be right for a December increase.
