US stocks could be in for a jolt of volatility this week as Congress debates whether to authorise a military strike against Syria and as the Federal Reserve’s pivotal decision on winding down stimulus nears.
US equity markets have remained on a relatively even keel recently even as others such as US Treasuries and emerging markets have been roiled by worries over what the Fed is likely to do at its meeting later this month and by the Obama administration’s campaign to punish Syria for an alleged chemical weapons attack against civilians.
The fact that the congressional debate over Syria comes on the effective eve of the Fed’s key meeting won’t help Wall Street’s mood. The central bank’s policy-setting committee meets on 17 and 18 September and is expected to reduce the pace of its $85bn a month in bond purchases.
The question of just who will lead the Fed after Chairman Ben Bernanke steps down early next year also creates uncertainty for investors, not to mention another possible showdown between the White House and Congress over the federal budget and debt ceiling.
The week ahead is relatively light by way of economic data, with the biggest scheduled release being retail sales for August, due on Friday. The Reuters consensus forecast calls for an increase of 0.4 per cent from July.
The earnings calendar is also thin, with just two notable names on the docket: apparel company Phillips-Van Heusen Corp today and grocer Kroger Co on Thursday.