Fed expectations have changed a bit. A record-breaking Federal Fund Rate can affect stock market
Aa
Share
The US Dollar saw a clear trend after yesterday’s inflation rate. However, the price movement of US Indices was less certain as investors were uncertain about the true value of the S&P 500, NASDAQ, and Dow Jones. After yesterday’s announcement, the NASDAQ was the only higher index to end the day but still experienced strong bearish spikes. The Dow Jones saw the worst performance, and the SNP500 saw a slight decline.
The price of the SNP500 saw both up and down price movements but mainly saw sellers in control. The lowest daily price was $4,093, which may form a support level over the next week. During this morning’s futures session, the price is declining and is currently hovering at 0.80% lower than the pre-CPI announcement price.
After yesterday's decline, technical analysis looks very different on smaller timeframes. The price on the 15-minute and 30-minute timeframe is now trading below the Ichimoku Cloud, and the RSI has dropped to 34.00. Both are an indication of a potential decline, and moving averages are also providing a similar indication. However, on larger timeframes, such as the 4-Hour, indications are trading at neutral and are providing no clear up or down direction.
S&P500 30-Minutes on February 15th
Coca-Cola - Investors were specifically impressed by the Revenue, which came in 3% higher than expected at $10.20 Billion
From the fundamental side, the asset is influenced by positive and negative aspects. In general, the SNP500 and the stock market have been supported by recent earnings reports. For example, Coca-Cola has recently released its earnings confirming a higher Revenue and Earnings Per Share. Investors were specifically impressed by the Revenue, which came in 3% higher than expected at $10.20 Billion. Additionally, Airbnb has also confirmed 45% higher earnings per share.
The negative influences are mainly related to the monetary policy. Previously market participants expected a 0.25% hike at the next meeting and then a break. However, due to strong inflation data in January, investors are now contemplating whether the Fed will hike 0.50% and continue hiking to 6%. A Federal Fund Rate of 6% will take the monetary policy to its highest in 22 years and can significantly pressure the stock market. Investors are awaiting commentary from members of the Federal Open Market Committee.
