Market Analysis: S&P 500 Falls amid News from the Fed
Yesterday was an important evening that had an impact on many financial markets. The Federal Reserve (as expected) kept the rate at the same level. According to Powell:
→ The full effect of tightening the monetary policy has yet to be felt.
→ [They] will continue to act cautiously, basing further decisions on incoming statistical data.
→ Inflation is much higher than the target.
Will the Fed tighten monetary policy further? Opinions are divided. JP Morgan analysts believe that the rate hike cycle is over. On the contrary, Vanguard analysts believe that rates will have to be raised again (and even more than once).
Perhaps the Fed's repeated rhetoric no longer looks like a sign of confidence? One way or another, the US stock market fell sharply, making the recession scenario more pressing.
On September 19, we wrote that the market was under bearish pressure ahead of the FOMC meeting. The graph shows that they managed to realize their advantage.
Bears' arguments:
→ resistance should now be expected from the level 4,440;
→ the rising channel is broken, which not only confirms the weakness of the bulls, but may also signal the end of the boom associated with the spread of AI;
→ the decrease in the amplitude of oscillations A→B→C→D (each subsequent movement is 50% of the previous one), which was observed since the end of spring, seems to have ended, since movement below level E gives the initiative to the bears. And to remember the statistics, according to which the end of September is traditionally the worst period for the stock market.
Bulls' arguments:
→ the price of the S&P 500 may find support near the median line of the descending channel;
→ the price may find support from the 4,350 level, where the bulls had an advantage this summer.