Equities report: Fed decision day

US stock markets moved higher with the Nasdaq, S&P 500 and Dow Jones moving higher since last week .In today’s report we are to discuss the Fed’s interest rate decision, upcoming US financial releases and Meta’s and Microsoft’s earnings reports and conclude the report with a technical analysis of S&P 500’s daily chart.

FED decision day

The Fed’s interest rate decision is set to occur later on today. The Fed is widely expected to remain on hold by market participants, with FFF currently implying a 96.9% probability for such a scenario to materialize. Therefore, attention will turn to the bank’s accompanying statement and Fed Chair Powell’s press conference. In turn, should it be implied in the bank’s statement and Fed Chair Powell’s presser that the bank may consider cutting interest rates in the near future, it could aid the US Equities markets and vice versa. However, given the ongoing rhetoric from the Trump administration and pressure on Fed Chair Powell to resign as well as to cut rates, traders may also be interested in seeing if any divisions have emerged within the Fed and whether there will be dissenters from the bank’s decision. Furthermore, depending on the bank’s decision, the US President may also decide to comment on the upcoming replacement of the Fed Chair and could thus lead to significant volatility in the markets. Overall, the decision in itself is significant yet our interest is in Fed Chair Powell’s press conference and in particular the questions being asked by the attending journalists. Specifically, we would like to see journalists asking Powell in regards to his future and the fake resignation letter that had recently circulated on social media platforms.

US Financial releases

There are variety of financial releases stemming from the US, starting with the PCE rates for June which are due out on Thursday and are expected to showcase an acceleration of inflationary pressures in the US economy on a headline level from 2.3% to 2.5% whereas the Core PCE rate is expected to remain steady at 2.7%. Moreover, the US Employment data for July which is due out on Friday, is expected to showcase a loosening labour market when looking at the expected NFP figure and the anticipated uptick in the unemployment rate. In our view, the possible acceleration of inflationary pressures in the US economy could increase pressure on the Fed to maintain its restrictive monetary policy approach, which could then weigh on the US Equities markets. Whilst simultaneously, a loosening labour market could increase pressure on the Fed to adopt a more dovish tone which may have the opposite effect.

Meta and Microsoft earnings due out today

Meta and Facebook are set to release their earnings later on today. Starting with Meta, analysts are expecting their EPS figure to come in at at 5.85 and their revenue at $44.84 billion and Microsoft is expected to report earnings at 3.37 their revenue at $3.79 billion. Should they beat their earnings and revenue estimations, it could possibly aid their stock price respectively, whereas should they fail to meet the analyst’s expectations it may have the opposite effect.

Earnings reports ahead

We make a start with the earnings paragraph today by noting UBS’s (#UBS) and Pfizer’s (#PFE) earnings on Tuesday, following AirBnB (#ABNB), Uber (#UBER) and Disney (#DIS) on Wednesday and Alibaba (#BABA) on Thursday

Technical analysis

US500 daily chart

Support: 6135 (S1), 5850 (S2), 5580 (S3).

Resistance: 6425 (R1), 6715 (R2), 7000 (R3).

S&P 500 appears to be moving in an upwards fashion with the index confirming our 6425 (R1) resistance level. We opt for a bullish outlook for the index and supporting our case is the RSI indicator below our chart which currently registers a figure just above 70 implying a strong bullish market sentiment. Yet the index may be due a correction to lower ground. Nonetheless, for our bullish outlook to continue we would require a clear break above the possible 6245 (R1) resistance line with the next possible target for the bulls being the 6715 (R2) resistance line. On the other hand for a sideways bias we would require the index to remain confined between our 6135 (S1) support level and our 6425 (R1) resistance line. Lastly, for a bearish outlook we would require a clear break below the 6135 (S1) support level with the next possible target for the bears being the 5850 (S2) support line.