- The S&P 500, the Nasdaq 100, and the Dow Jones drop as traders prepare for US NFP.
- US President Joe Biden presented his budget for 2024.
Wall Street maintains a downbeat mode late in the New York session, with US equities registering substantial losses. Sentiment shifted sour, with traders expecting additional labor market data and next week’s inflationary figures as the Federal Reserve (Fed) prepares for the upcoming meeting.
At the time of writing, the S&P 500 is falling 1.43%, at 3,925.50. Following suit is the heavy-tech Nasdaq 100, down 1.58% at 11,390.53, while the Dow Jones drops 1.31%, at 32,367.39.
US equity indices, the US Dollar, and UST bond yields are down, ahead of US NFP
On Tuesday, Jerome Powell began his two-day testimony before the US Senate and the House of Representatives. Powell said that the Federal Funds Rate (FFR) would peak higher than estimates, and if upcoming data warranted a larger hike, the Fed has the tools to do it. When asked about the March 21-22 meeting, he said, “We have not made any decision,” leaving the door open for a 50 or 25 bps lift.
Powell’s words rattled the financial markets, with the S&P 500 plunging from around 4,056.90 to 3,927.00 for a 3.22% fall. The greenback advanced, as shown by the US Dollar Index, which went up 1.50% and printed a weekly high of 105.883. US Treasury bond yields skyrocketed, with 2s and 10s peaking at 5.084% and 4.019%, respectively. Consequently, the US bond yield curve inverted the most since the 1980s, at over 100 bps. The US 2s-10s yield curve has functioned as a forecast indicator of recessions within a 12-month period.
Thursday’s data in the US economic docket cooled down expectations of a 50 bps hike, with unemployment claims rising above estimates. Traders’ focus is on Friday’s US Nonfarm Payrolls report and next week’s US Consumer Price Index.
An upbeat labor market data and higher inflation could reinforce the Fed’s hawkish shift of late. Otherwise, it could pave the way for 25 bps increases. The CME FedWatch Tool has fully priced in a 25 bps rate increase, and odds for a 50 bps lie at 62.4%.
US President Joe Biden filled his budget for the 2024 fiscal year, which includes a plan to cut $3 trillion from the deficit over the next decade. Some of the highlights are:
- Taxes on wealthy people and large corporations.
- Increase of corporate tax rate to 28%.
- Hiking taxes on oil and gas companies.
Of late, Bitcoin is plummeting 4.52%, at 20,705 a coin, in what appears to be traders squaring off positions ahead of volatile US economic data.
S&P 500 Daily chart
|Today last price||3915.92|
|Today Daily Change||-74.83|
|Today Daily Change %||-1.88|
|Today daily open||3990.75|
|Previous Daily High||3998.54|
|Previous Daily Low||3968.19|
|Previous Weekly High||4046.79|
|Previous Weekly Low||3919.66|
|Previous Monthly High||4192.63|
|Previous Monthly Low||3940.95|
|Daily Fibonacci 38.2%||3986.95|
|Daily Fibonacci 61.8%||3979.78|
|Daily Pivot Point S1||3973.11|
|Daily Pivot Point S2||3955.48|
|Daily Pivot Point S3||3942.76|
|Daily Pivot Point R1||4003.46|
|Daily Pivot Point R2||4016.18|
|Daily Pivot Point R3||4033.81|
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Follow us on Telegram
Stay updated of all the news
EUR/USD drops toward 1.0650 ahead of German inflation data
EUR/USD is falling toward 1.0650 in European trading. Dismal China's Manufacturing PMI and pre-US debt deal vote anxiety support the safe-haven US Dollar while markets pare ECB rate hike bets after softer French inflation data. German inflation data, Fedspeak and US House vote eyed.
GBP/USD extends losses toward 1.2350 amid firmer US Dollar
GBP/USD is extending losses toward 1.2350 in the European session. Markets stay jittery amid China growth worries and ahead of the US House vote on the debt deal. Hawkish Fed's Mester underpins the ongoing US Dollar upsurge. More Fedspeak in focus.
Gold price rebound eyes $1,990 and US factors
Gold Price picks up bids to refresh intraday high as buyers cheer a two-day winning streak, after refreshing the lowest levels in 10 weeks. In doing so, the XAU/USD fails to justify the latest rebound in the DXY but aptly cheers the downbeat Treasury bond yields.
BTC bulls recovery plan targets $30,000 as bears exhaust
Bitcoin action slows down, allowing bears to doubt their strength. As more time elapses, the chances of bulls taking over control of BTC become more likely. A spillover effect would be noticeable in Ethereum and Ripple prices.
Risk off flow into month end
We had warned against the market wanting to get overly excited about the news of a US debt ceiling deal that was always going to get done. And now that this reality is coming to fruition, it’s back to focusing on the market drivers where investors need to focus.