Hi, dear traders! This is the latest review of the US stock market by InstaForex. A reassessment of US monetary policy may be on the cards today. Investors seem to be ready to accept a higher interest rate. Will they lose their risk appetite? What will Fed policymakers say, and what is Joe Biden’s outlook on 2023? These are the main questions of the new trading day. On Monday, US indices closed in negative territory, but it was not a rout. Most indices posted relatively minor losses. At the closing bell, the Dow Jones Industrial Average went down by 35 points or 0.11%. The Nasdaq lost 119 points and dropped by 1%, while the benchmark S&P 500 slid down by 0.62% to 4,111 points. Indices were mixed during Tuesday’s premarket trading. Dow Jones futures decreased by 0.15%, while Nasdaq and S&P 500 futures added between 0.08% and 0.32%. Today, the S&P 500 is expected to trade in the intraday corridor between 4,070 and 4,180. On Monday, US stock indices declined as traders adopted a wait-and-see attitude once again. Last week’s strong US labor market data is looming over Wall Street. US Treasury Secretary Janet Yellen stated on Monday that the United States might avoid a recession thanks to lower inflation and the strength of its labor market. However, steady job growth may lead the Fed to tighten its monetary policy even further.

US equities, particularly mega cap stocks, rebounded strongly in 2023 amid hopes that the Federal Reserve might ease its aggressive tightening cycle. However, market expectations changed on Friday, with money markets now expecting the interest rate to peak at 5.1% in July.

Nevertheless, some meme stocks such as AMC Entertainment and GameStop jumped by 11.8% and 7.2% respectively on Monday, indicating that there is still risk appetite in the market.

Shares of Tesla added 2.5% after a jury ruled that the company’s CEO Elon Musk did not deceive investors with his Twitter posts.

In other corporate news, Tyson Foods lost 4.6% after reporting weak earnings and revenues for the first quarter. Meanwhile, some Chinese stocks listed in the US fell amid geopolitical concerns following the shutdown of the Chinese spy balloon by a US fighter jet on Saturday. Most sector indices on the S&P 500 declined, except for utilities and consumer staples.

US indices consolidated slightly on Tuesday, as investors await a key speech by Jerome Powell. Today’s remarks by the Fed chairman will be the first since Friday’s release of US Nonfarm Payroll data for January.

Expectations in the futures market are now fully aligned with outlooks of several Fed policymakers. Market participants now see the Fed funds rate peak above 5% this year, surpassing the current range of 4.5-4.75% by the end of the year.

Other Fed policymakers have regarded the strong Nonfarm Payrolls report as a cause for alarm. Raphael Bostic, the president of the Fed Reserve Bank of Atlanta, said on Monday that the tight labor market would mean the Fed would have to do “a little more work.”

In Australia, the country’s central bank hiked the cash rate by 25 basis points to 3.35%, its highest level in a decade. The Reserve Bank of Australia said in a statement that further rate hikes will be necessary, contrary to market expectations.

Today, US president Joe Biden will give his State of the Union address, his second such address during his tenure. Investors will closely follow Biden’s speech and his stand-off with the US congress on raising the debt ceiling. The US president is expected to insist that raising the debt limit is not up for debate.

In the meantime, shares of British Petroleum jumped by almost 4% after the oil giant posted record-high earnings of $27.6 billion. BP also increased its dividends by 10%. This strong earnings report followed last week’s reports by BP’s competitors, Shell, ExxonMobil, and Chevron, which were also positive. The US dollar index has continued its advance, gaining 0.2% intraday and hitting 103.8 points. The index’s trajectory today will strongly depend on statements by policymakers. As a result, the USDX might move in either direction. Today, the intraday corridor for the US dollar index is defined between 103.2 and 104.3.

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00:00 INTRO
00:32 S&P500
01:36 USA
03:31 QUOTES
05:42 USDX
07:26 USD | CAD
08:24 OIL
09:25 BTC | USD