U.S. Stock Markets Decline Ahead of Fed Minutes, Google Faces Potential Breakup

Markets are particularly focused on the release of the Federal Reserve’s September meeting minutes, expected later today, which will provide crucial insight into the central bank’s future plans for interest rates.

Doubts about the Federal Reserve’s intentions to cut rates sharply have increased following last week’s stronger-than-expected payrolls report. According to CME’s FedWatch tool, there is an 81.1% chance of a 25 basis point cut in November, with an 18.9% chance of no change.

The Federal Reserve cut rates by 50 basis points last month and signaled that future rate decisions would depend on inflation and labor market conditions. Additionally, the consumer price index for September is set to be released on Thursday, which will likely influence future policy decisions.

Google may face a forced breakup as the U.S. Department of Justice considers potential sanctions against its parent company, Alphabet (GOOG), following a landmark antitrust ruling. The case found Alphabet guilty of abusing its dominant position in the search and digital advertising markets. The DOJ is reportedly exploring “structural and behavioral remedies,” which could prevent Google from using its other platforms, such as its web browser, app store, and operating system, to unfairly promote its search services.

The DOJ argued that Google has controlled the most prominent distribution channels for over a decade, leaving competitors with little incentive to vie for users. The proposed remedies could significantly impact Google’s business model and market dominance. In a separate development, global miner Rio Tinto (NYSE) agreed to acquire U.S.-based Arcadia Lithium (NYSE) for $6.7 billion in a cash deal, further consolidating its position in the mining sector.

Oil prices rebounded on Wednesday, recovering from sharp losses earlier in the week. However, the gains were tempered by signs of a significant rise in U.S. crude inventories. Data from the American Petroleum Institute revealed that U.S. crude inventories surged by 10.9 million barrels last week, far exceeding the expected 1.95 million barrel increase. While oil prices recovered some ground, concerns about oversupply and cooling demand in the U.S. continue to loom large.

Official data from the Energy Information Administration, due to be released later in the session, could further impact oil markets, especially as the U.S. South prepares for a series of potentially severe hurricanes.

Third-Quarter Earnings Season Begins

Investors are also turning their attention to the third-quarter earnings season, which kicks off this week with several major banks set to report their results on Friday. These reports will be closely watched for any indications of how companies are faring amid economic uncertainty and fluctuating interest rates. The earnings season is expected to set the tone for market sentiment in the coming weeks.