Following a five-day decline brought on by worries that the Federal Reserve would maintain its hawkish stance in the face of numerous economic challenges, US stock index futures made a small recovery on Thursday. S&P 500 futures contracts increased by 0.2% after the index experienced its longest decline in a single month since 2011. While the industrial Dow Jones only saw a 0.1% increase, Nasdaq 100 futures increased by 0.3%. The four-day decline in European stock indices has continued, with the most significant weekly drops seen in the real estate and telecommunications sectors. Energy and mining company shares increased.
The bond market's rally has so far slowed down. As investors grow more certain that an economic downturn is coming next year, the 10-year US Treasury bond yield has decreased to almost a three-month low. The dollar index stayed the same.
Due to the lack of fundamental statistics, it is unlikely that traders can anticipate a spike in volatility today. Instead, they will wait for Friday's report on producer prices in the US and expect a decline in the consumer price index next week. This will help determine how successful the Fed's policy has been in containing inflation this year and whether the central bank will be able to end its aggressive campaign of interest rate increases as promised. If none of this occurs, stock index pressure will increase by year's end, triggering another wave of falling indices.
Morgan Stanley and JPMorgan Chase & Co. strategists advise investors against purchasing risky assets as the likelihood that the Fed will formally announce a loosening of its monetary policy has recently diminished. The expectation of a dovish turn, which Fed officials partially confirmed, led to a 14% increase in the S&P 500 for seven weeks. The index is currently losing ground quickly.
There will be sufficient justifications for this if the Fed does not alter its course this time. Recent information indicates that the economy is still in great shape and is not hampered by the high cost of borrowing.
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Investors evaluated the effects of China's steps to loosen coronavirus restrictions as oil prices increased after a four-day decline.
According to its technical picture, the S&P 500 continues to trade in a sideways channel. Today, securing $3,925 will be of utmost importance. If trading is done above this range, we can anticipate a reversal and a return of demand for risky assets. This will establish strong foundations for the trading instrument's strengthening to $3,960, potentially reaching $3,983. Although $4,010 is a little higher, surpassing it before the Fed meeting the following week will be very challenging. Buyers have to declare themselves around $3,925 in the event of further downward movement, as the pressure on the index will only grow below this point. The trading instrument will move to $3,894 if this range is broken, with the $3,861 region serving as the farthest target
