John Hancock: Weekly Market Recap Week Ended September 18th
Near-zero rate outlook
The U.S. Federal Reserve kept interest rates unchanged and signaled that it expects to keep its benchmark rate near zero for at least three more years. All 17 Fed officials who made projections said they expect to keep rates near zero at least through next year, and 13 projected rates would stay there through 2023.
The economic impact of COVID-19 led many companies to take a cautious approach with corporate cash, as spending to buy back company shares plunged during this year’s second quarter. Share repurchases by companies in the S&P 500 dropped 55% from this year’s first quarter, according to S&P Dow Jones Indices.
A monthly gauge of U.S. consumer sentiment climbed to the highest level since March of this year, according to a preliminary reading on Friday from a University of Michigan survey. However, the index remains below its level in February, before the coronavirus pandemic began to weigh heavily on the economy.
Although Democrats and Republicans remained at odds over another coronavirus economic relief package, congressional leaders reported progress on another front. Leaders agreed on the broad outlines of a short-term spending measure that could avert a potential government shutdown next month.