S&P 500 ETF Trust SPY Stock News and Forecast: Counter-trend rally awaiting the Fed Interest Rate decision


  • S&P 500 treads water ahead of imminent Fed decision.
  • SPY volatility drops as investors take to the sidelines.
  • Fed decision due on Wednesday with big 50 basis point interest rate hike widely expected.

The main US equity indices struggled for direction on Tuesday as investors largely stayed on the sidelines before the Federal Reserve raises interest rates on Wednesday. The Fed is expected by all to raise rates by 50 bps when it meets this evening. Market have largely priced in this hike and are pricing in 3 more aggressive 50 bps rate hikes this year. Any deviation from Jerome Powell and the FOMC in its press conference will see markets whipsaw violently as investors reposition. 

Read more stock market research

S&P 500 (SPY) stock news: All about the Fed

Little to report on Tuesday with some initial selling pressure quickly seeing short covering and an afternoon rebound for the main indices. We are unlikely to see too much action today before the Fed decision. Actually, the press conference will be the main event. Recent increasingly hawkish commentary has seen the bond markets pencil more 50 bps rate hikes for the year.

US CPI is still increasing as the latest data for March showed and employment growth is strong with companies struggling to fill vacancies. However, the last US GDP report was unexpectedly weak due to the surging dollar and sanctions hitting the trade balance. 

Source: CMEgroup.com

The above shows the near-certainty of a 50 bps rate rise this time out. Pushing the calendar out further we see that by December markets are penciling in some 275 bps of Fed interest rate hikes (78.6% probability)

Source: cmegroup.com

SPY stock forecast

We have already mentioned positioning and sentiment are weak and so a counter-trend rally may be inevitable. However, we also note growing expectations of this rally and so favor a frustration move lower to smoke out early longs. Then the rally can progress. This would entail the SPY to move to $400 or just below.

This is just a feeling not based on technical evidence, but the SPY has already put in a lower low to confirm the 2022 bearish trend. Above $420 we would expect the rally to continue to test resistance at $448.

SPY stock chart, daily

Share: Feed news

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.

Recommended content


Recommended content

Editors’ Picks

EUR/USD clings to daily gains above 1.0650

EUR/USD clings to daily gains above 1.0650

EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.

EUR/USD News

GBP/USD recovers toward 1.2450 after UK Retail Sales data

GBP/USD recovers toward 1.2450 after UK Retail Sales data

GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.

GBP/USD News

Gold holds steady at around $2,380 following earlier spike

Gold holds steady at around $2,380 following earlier spike

Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.

Gold News

Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium

Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in

Bitcoin price shows no signs of directional bias while it holds above  $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research. 

Read more

Week ahead – US GDP and BoJ decision on top of next week’s agenda

Week ahead – US GDP and BoJ decision on top of next week’s agenda

US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.

Read more

Forex MAJORS

Cryptocurrencies

Signatures