The US Federal Reserve (Fed) is due to hold an interest rate meeting next week and major US stock indexes closed in the black on Friday 9. Analysts believe the Consumer Price Index (CPI) report will be released next Tuesday and the Federal Reserve December interest rate meeting will be the two key factors for the recovery of the US stock market at the end of the year.
The S&P was up about 10% on Friday from its October lows but remains down more than 17% this year, with the index stalling this week as stronger-than-expected economic data stoked worries about a Federal Aggressive reserve and fears of recession.
Analysts believe that the performance of US stocks in the rest of the year could depend on the CPI report released next Tuesday. The better-than-expected data could intensify people’s worries that the Federal Reserve will become more aggressive, thus putting pressure on the stock market .
David Lefkowitz, head of US equities at the UBS Wealth Management Office of the Chief Investment Officer, said: “Usually around the CPI report, the market is quite volatile and I think the market will be the same when the data comes out next time. week.
The market expects US November CPI data released next Tuesday to increase 7.3% year-on-year, with a monthly growth rate of 0.3%, and the core CPI monthly growth rate will be 0.3%. 0.3%.
At the same time, the Federal Reserve will hold an interest rate meeting on December 13 and 14. Wall Street expects the Fed to announce a 2-point rate hike and slow the pace of interest rate hikes after higher rates. rates of 3 points.
Wall Street should pay more attention to the Fed’s terminal interest rate forecasts and related comments from Fed Chairman Jerome Powell on the recession.
The bond market has recently released signs of a recession, with 2-year bonds and 10-year US Treasury yieldThe curve has recently deteriorated, reaching its highest level in at least nearly 20 years.
Yields on shorter-dated US Treasuries exceed those on longer-dated US Treasuries, a condition known as an “inversion” (aka inversion) of the yield curve. The yield curve has been used by the market as a reliable predictor of economic downturn. While this does not mean that the economic recession is coming, it could manifest itself in the next 1 or 2 years or so. The market usually focuses on 10 years minus 2 years or 10 years minus 3 years Monthly Bond Spreads.
Some analysts expect large funds with plenty of liquidity and seasonality could help drive a year-end rally in stocks if CPI data falls short of expectations or investors take comfort in Fed comments.
“Stock Trader’s Almanac” (Stock Trader’s Almanac) shows that the S&P has risen 1.5% every December since 1950, which is the third best performance of all months. This year, the S&P has lost 3.6% so far in December.%.
Walter Todd, chief investment officer at Greenwood Capital, predicted, “Unless there are major surprises in CPI and Fed policy, seasonal factors are expected to allow investors to usher in a rebound at the end of the year.”
However, some analysts believe the recent bear market rally is over. Morgan Stanley strategists warned clients earlier this week of risks to corporate earnings and urged investors to shift into defensive sectors such as health care and utilities.
Morgan Stanley strategists advise investors: “Take profits before the bear market actually returns.”
