The central bank is still broadly expected to keep rates unchanged at the current 3.50% to 3.75% at its gathering next week. But even then, there’s a growing minority planning for an increase: Fed funds futures trading indicates a nearly 38% probability of a quarter percentage point hike, up from less than 12% a week ago.<\/p>\n
Brent<\/a>, the global crude benchmark, hit $100 a barrel <\/a>on Thursday for the first time since late May amid a new round of tit-for-tat attacks between the U.S. and Iran. The average price for a gallon of gasoline in the U.S. reached $4 per gallon<\/a> this week \u2014 the highest in more than a month, according to AAA.<\/p>\n Thursday’s employment data bolstered the view that the Fed can focus more on inflation \u2014 which could accelerate as energy prices climb<\/a> \u2014 than the health of the labor market.<\/p>\n Initial jobless claims dropped to 187,000 in the week ended July 18, the Labor Department reported. That was the fewest claims since 1969, when the U.S. population was 60% of what it is today. <\/p>\n “At the moment, the outlook for economic growth is showing some signs of overheating if today’s weekly jobless claims figures can be believed,” said Christopher S. Rupkey, chief economist at FWDBONDS. “But for how long is the question if energy prices continue to spiral upward.”<\/p>\n Rising expectations for a rate increase may be adding to the downward pressure on the stock market<\/a> Thursday, according to Larry Tentarelli, chief technical strategist at the Blue Chip Daily Trend Report. That’s on top of the breakout in oil prices and Treasury yields, and Alphabet<\/a>‘s post-earnings swoon, he said.<\/p>\n The blue-chip Dow Jones Industrial Average<\/a> tumbled more than 600 points in midday trading. The Nasdaq Composite<\/a> \u2014 heavily weighted to technology stocks that can be sensitive to higher borrowing costs \u2014 shed nearly 3%.<\/p>\n “You really just have a perfect storm of headwinds right now,” Tentarelli said.<\/p>\n Stock Chart IconStock chart icon The Nasdaq Composite, 1-day<\/p>\n “We’ve got a Fed meeting in six days, and I think investors should not be in a hurry to buy anything,” he added. “There’s times where you can just sit it out and be patient.”<\/p>\n ‘A readthrough’<\/p>\n Market participants looking for insights into the Fed’s outlook are closely monitoring the 2-year U.S. Treasury<\/a> yield. The yield, which rose more than 6 basis points on Thursday, offers “a readthrough on what the Fed might do next,” said Ross Mayfield, an investment strategist at Baird.<\/p>\n Stock Chart IconStock chart icon U.S. 2-year Treasury, 1-month<\/p>\n While Mayfield said investors don’t need to worry about an interest rate move next week, September feels like a “live” meeting for the Fed.<\/p>\n![\"hide](\"https:\/\/static-redesign.cnbcfm.com\/dist\/a54b41835a8b60db28c2.svg\")
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