Yesterday's decisions of the Federal Reserve System to keep monetary policy unchanged and further stimulate the economy, despite the risk of overheating and inflationary pressure, were positively received by traders. It led to the recovery of the stock market. The flow of cheap money will not run out, at least until the middle of 2022, when many Fed officials plan to start talking about raising interest rates in the United States. Powell said the Fed is getting closer to meeting its goals for "further substantial progress" on inflation and employment. "As for inflation, we seem to have made more than significant progress. In my opinion and the opinion of many others, this part of the test has been passed," he said during a press conference.
As for the forecasts, the committee now sees GDP growth of 5.9% this year compared to the June forecast of 7%. However, in 2023, the growth will be 3.8% compared to 3.3% earlier. The forecasts also signal that FOMC members expect further inflation growth this year. Core inflation will grow by 3.7% against the 3% previously expected. Officials forecast inflation at 2.3% in 2022, compared with the previous forecast of 2.1%.
As for the premarket and the main movements, several companies from different sectors have attracted attention, demonstrating a fairly good recovery.
Growth was noted by BlackBerry, which reported quarterly profit that exceeded economists' expectations. Although BlackBerry reported a loss of 6 cents per share compared to an expected loss of 7 cents per share, the company's revenue was $ 175 million, exceeding the estimate of $ 164 million. Shares in the premarket rose by more than 7%.
Darden Restaurants, the parent company of Olive Garden, reported earnings of $ 1.76 per share, which was slightly higher than the forecast of $ 1.64 per share. Due to a sharp increase in sales after quarantine restrictions by 47.5%, it was possible to exceed the set plan. Shares in the premarket rose by 3%.
The growth was also noted by the software company Salesforce, which raised its revenue forecast for 2022 to $ 26.25–26.35 billion, which is significantly higher than the previous estimate of $ 26.2-26.3 billion. Shares in the premarket rose by 2%.
Joby Aviation has added a very cool weight to the premarket. It happened immediately after Morgan Stanley mentioned this project and raised the company's rating. In the note, investors were told that they should pay attention to the shares of this company, which has excellent growth potential. Joby Aviation shares rose by more than 5%.
Given that, in general, investors "exhaled" after yesterday's Fed meeting, growth is observed in almost all sectors. In healthcare, shares of Biogen, the drugmaker, rose on the premarket after it became clear that the company's somewhat controversial drug for Alzheimer's disease will be the company's main product in the long term. In the fintech sector, SoFi shares rose in the premarket after rising by 11%. The company ranks 6th among the most mentioned shares of WallStreetBets.
As for the technical picture of the S&P 500 index, everything now depends on whether buyers will be able to get above the important value of 4,425 points or not. If we allow a breakthrough in this area, we can count on a larger upward correction to the maximum of 4,488 and then an update of the August levels in the area of 4,547. If buyers fail to cope with the pressure that remains from the problem with the US debt ceiling, then another wave of decline in the stock index to the support of 4,346 is not excluded, against which the bear market will quickly return with the prospect of updating the level of 4,231.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.