SP500 Bounces, Awaits FOMC Decision
15 June 2022
Sentiment slightly improved today, following the ECB emergency meeting, but investors remain on the edge ahead of tonight's Fed verdict.
At the time of writing, the SP500 index traded 0.7% higher, hovering near 3,765 USD, trying to recover from the recent nasty selloff.
All eyes on Fed
According to US data released on Friday, prices in America increased 8.6% from the previous year in May. In addition to the highest rate of price rises since 1981, that measurement of the Consumer Price Index also revealed broad inflation with little indications of a peak in pricing pressures.
A few hours later, the University of Michigan announced that consumer confidence had reached the lowest point ever noted in their poll, which goes back to the middle of the 1970s.
As a result, stocks tanked, while the USD strengthened notably as investors started to price in a 75 bps rate hike today, up from 50 bps expected just a week ago.
Wall Street firms including JPMorgan, Goldman Sachs, and Evercore ISI altered their projections to estimate that the increase will instead be 0.75%, although they had earlier predicted a 0.50 percent rate hike this week.
Trend remains bearish
The 200-week average at around 3505/3500 USD and the 50% retracement of the 2020–2021 bull trend represent the next support levels, according to Credit Suisse analysts, who have maintained their bearish outlook.
On the other hand, the index must climb above 3,900 USD to cancel the immediate selling pressure. From the short-term perspective, the resistance could be located at yesterday's highs of 3,800 USD.