The S&P 500 finished lower by 30 bps, despite rising by more than 1% at the open yesterday. The market fell after the hotter-than-expected JOLTS data showed 10.7 million job openings versus a forecast for 9.7 million. The data also sent rates and the dollar higher. The Fed references the JOLTS data a lot, especially when it comes to the number of Job openings to the number of unemployed people. Good news on the economy can be viewed as bad news for stocks because investors worry the data will prevent the Fed from slowing the pace of rate hikes in its bid to get inflation under control — a process that Fed Chair Jerome Powell has said will require a period of below-trend growth.
What Earnings Season tells us
A mixed third-quarter corporate earnings season continues. With 268 of S&P 500 constituents having reported through Monday, 73% have delivered earnings above expectations, 5% have matched and 22% were below, according to Refinitiv data.The numbers appear not to have been as bad as many investors feared, and this is one of the factors that helped the S&P 500 record a sturdy rally last month.
The Fed
The Fed is expected to raise rates by 75 basis points to a range of 3.75% to 4% when it concludes its two-day meeting on Wednesday.
"The market has already priced in a 75 basis point hike for this month and a 50 basis point for December as previously announced by the Fed,” said Guido Petrelli, founder and CEO of Merlin Investor. “If the Fed sticks to their plan, while assuring that a harder move is not deemed to be necessary at this point in time, then I would expect the market to react well with all the major exchanges continuing to gain as we have seen recently.”
Technical Analysis
SP500 has been trading within a downward channel which has widened over time as we have seen the lower lows pusher deeper due to the growing momentum in sellers, the previous pullbacks from the earlier lows show us that buyers still had momentum with the first pullback in March driving prices up by 10.56% and then the second pullback in June lasted through to August saw buyers push prices further up by 18%. The growth in momentum indicates that the buyers have not been completely flushed out and still have enough momentum to keep prices elevated but the most recent pullback before the FED meeting has managed to keep prices in a holding position with a 10% gain. If buyers manage to hold on we could see prices pushing further up to 4000 but this not as attractive as price drop from here to 3570.
What Earnings Season tells us
A mixed third-quarter corporate earnings season continues. With 268 of S&P 500 constituents having reported through Monday, 73% have delivered earnings above expectations, 5% have matched and 22% were below, according to Refinitiv data.The numbers appear not to have been as bad as many investors feared, and this is one of the factors that helped the S&P 500 record a sturdy rally last month.
The Fed
The Fed is expected to raise rates by 75 basis points to a range of 3.75% to 4% when it concludes its two-day meeting on Wednesday.
"The market has already priced in a 75 basis point hike for this month and a 50 basis point for December as previously announced by the Fed,” said Guido Petrelli, founder and CEO of Merlin Investor. “If the Fed sticks to their plan, while assuring that a harder move is not deemed to be necessary at this point in time, then I would expect the market to react well with all the major exchanges continuing to gain as we have seen recently.”
Technical Analysis
SP500 has been trading within a downward channel which has widened over time as we have seen the lower lows pusher deeper due to the growing momentum in sellers, the previous pullbacks from the earlier lows show us that buyers still had momentum with the first pullback in March driving prices up by 10.56% and then the second pullback in June lasted through to August saw buyers push prices further up by 18%. The growth in momentum indicates that the buyers have not been completely flushed out and still have enough momentum to keep prices elevated but the most recent pullback before the FED meeting has managed to keep prices in a holding position with a 10% gain. If buyers manage to hold on we could see prices pushing further up to 4000 but this not as attractive as price drop from here to 3570.