It's a new year, but the stock market is dealing with the same issues that plagued investors in 2022. The day started on an upbeat note with the main indices logging decent gains thanks to some bargain hunting activity before those gains quickly evaporated on renewed selling interest. The S&P 500 touched 3,878 at Tuesday morning's high before briefly dipping below 3,800 around midday.
Street ended lower on Tuesday, starting 2023 with a modest decline. With trading resuming after the three-day holiday weekend, investors carried over the negative sentiment that saw 2022 end with the worst annual performance since the Great Recession. The S&P 500 slipped 0.4% on the day, with energy stocks leading the slide.
Chart: SPX 15 mins
Link: Yesterday's idea
As I mentioned yesterday, "SPX 3850ish resistance still there, after a hard pull in the last hour of Friday trade, SPX looks quite extended from 8&21 EMAs."
Therefore, markets opened high without solid information becoming a clear trace back signal for overall markets. But, the good news is the market still holds up 3800ish level and the last 5 mins energy bar with vol indicates buyers are still there.
Today, the Fed will publish minutes of the meeting on at 2 p.m. in Washington. Officials saw inflation ending 2023 around 3.1%, according to their median projection, compared with 2.8% in the previous quarterly forecast released in September.
https://www.bloomberg.com/news/articles/2023-01-04/fed-minutes-to-reveal-source-of-inflation-angst-pushing-up-rates
Link: Fed News
The latest Fed outlook is at odds with that of Wall Street, which has generally become more sanguine in recent months as price pressures have started to moderate. In his post-meeting press conference, Chair Jerome Powell linked the central bank’s inflation pessimism to ongoing strength in the labor market, pointing to services prices in particular.
The Fed is entering 2023 with plenty of resolve to make sure it wins the war on inflation, which in 2022 rose to the highest levels in four decades and then started to decline in the final months of the year. The central bank began raising its benchmark interest rate from almost zero in March, which many outsiders criticized as a late start to the tightening cycle. It then picked up the pace with super-sized rate hikes for much of the rest of the year, bringing the federal funds rate to 4.3% — the highest since 2007.
At the December meeting, policymakers opted for a half-point rate hike, following four three-quarter-point moves. But they also signaled another 75 basis points worth of increases this year — more than what Fed watchers had been expecting, given the lower inflation readings in recent months.
The outlook for interest rates “was pretty hawkish,” and “much more than the market was pricing in.” Investors now expect the Fed to return to normal-sized quarter-point rate hikes at its next policy meeting on Jan. 31-Feb. 1, and see the federal funds rate peaking just below 5% around mid-year.
That expectation was bolstered by the most recent reading on price pressures published by the Commerce Department on Dec. 23, which showed so-called core inflation — excluding food and energy — rose just 0.2% in November. That was less than what was implied by the Fed’s latest projections, and monthly readings of a similar size going forward would be consistent with a return to the central bank’s 2% target.
With investors waiting for Fed Mins, I still insist my opinion "I don't think the FED will become even more hawkish."
Please feel free to express your ideas and thoughts in the comment section.
Street ended lower on Tuesday, starting 2023 with a modest decline. With trading resuming after the three-day holiday weekend, investors carried over the negative sentiment that saw 2022 end with the worst annual performance since the Great Recession. The S&P 500 slipped 0.4% on the day, with energy stocks leading the slide.
As I mentioned yesterday, "SPX 3850ish resistance still there, after a hard pull in the last hour of Friday trade, SPX looks quite extended from 8&21 EMAs."
Therefore, markets opened high without solid information becoming a clear trace back signal for overall markets. But, the good news is the market still holds up 3800ish level and the last 5 mins energy bar with vol indicates buyers are still there.
Today, the Fed will publish minutes of the meeting on at 2 p.m. in Washington. Officials saw inflation ending 2023 around 3.1%, according to their median projection, compared with 2.8% in the previous quarterly forecast released in September.
https://www.bloomberg.com/news/articles/2023-01-04/fed-minutes-to-reveal-source-of-inflation-angst-pushing-up-rates
Link: Fed News
The latest Fed outlook is at odds with that of Wall Street, which has generally become more sanguine in recent months as price pressures have started to moderate. In his post-meeting press conference, Chair Jerome Powell linked the central bank’s inflation pessimism to ongoing strength in the labor market, pointing to services prices in particular.
The Fed is entering 2023 with plenty of resolve to make sure it wins the war on inflation, which in 2022 rose to the highest levels in four decades and then started to decline in the final months of the year. The central bank began raising its benchmark interest rate from almost zero in March, which many outsiders criticized as a late start to the tightening cycle. It then picked up the pace with super-sized rate hikes for much of the rest of the year, bringing the federal funds rate to 4.3% — the highest since 2007.
At the December meeting, policymakers opted for a half-point rate hike, following four three-quarter-point moves. But they also signaled another 75 basis points worth of increases this year — more than what Fed watchers had been expecting, given the lower inflation readings in recent months.
The outlook for interest rates “was pretty hawkish,” and “much more than the market was pricing in.” Investors now expect the Fed to return to normal-sized quarter-point rate hikes at its next policy meeting on Jan. 31-Feb. 1, and see the federal funds rate peaking just below 5% around mid-year.
That expectation was bolstered by the most recent reading on price pressures published by the Commerce Department on Dec. 23, which showed so-called core inflation — excluding food and energy — rose just 0.2% in November. That was less than what was implied by the Fed’s latest projections, and monthly readings of a similar size going forward would be consistent with a return to the central bank’s 2% target.
With investors waiting for Fed Mins, I still insist my opinion "I don't think the FED will become even more hawkish."
Please feel free to express your ideas and thoughts in the comment section.