Powell's push coming today? [Video]
|US stocks are laser-focused on what the Fed’s speed of interest rate policy change is going to be. Surging inflation has been a big fear of the Fed and Jerome Powell reminded markets at the last FOMC meeting that interest rates may need to go higher than he had previously indicated. So, Powell’s speech at 18:30 UK time will be crucial for the next direction in stocks.
If Powell indicates a pivot may be ahead, and that the Fed is looking to pause rates that will most likely give US stocks a big push higher. However, the speech must also be read in light of the US CORE PCE data which will be released on Thursday. A big beat there and a hawkish Powell would send stocks lower, and not higher.
The S&P 500 has some great seasonals ahead. During midterm election years, the S&P500 has gained 15 times in December over the last 72 years.
So, the best scenarios for more S&P 500 upside would be a dovish Powell and a US CORE PCE reading coming in below 4.6% y/y for the core and below 5.9% for the Price index then it is reasonable to expect S&P500 buying.
Major trade risks: The major trade risk here is that the Fed keeps hiking aggressively, US inflation keeps rising and that will be a headwind for the S&P 500 into the last Fed meeting of the year on December 14.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.