Stock Market Reacts to Pending Fed Decision and Mixed Economic Data

After a consumer price index (CPI) announced on Tuesday at 4% year on year in May instead of 4.9% a month earlier, it was the turn of producer prices to show a sharp decline. Wednesday. These wholesale prices fell in May by 0.3% compared to April, more than expected, and rose only 1.1% over one year, an additional positive signal for the Fed.

Declining US inflation, a harbinger of a pause in the rise in dollar interest rates?

The Central Bank, which is due to announce its decision at 6:00 p.m. GMT, should pause its rate hikes to give itself time to assess the effect on inflation and the economy of its previous tightenings, analysts say .

“Inflation data supports Fed pause in rate hike campaign”, noted Art Hogan of B. Riley Wealth Management. For his part, Art Hogan “believes the last rate hike has passed”. “If this proves true, we should see the market continue its momentum in sectors that have been less sought after so far such as energy, industrials, healthcare and small caps”assures the analyst.

Investors will, however, scrutinize the new Fed forecasts, in particular the famous “dot plots” or average projections of the level of rates, as well as President Jerome Powell’s press conference at 6:30 p.m. GMT, to discern what the Monetary Committee will do. at the next meeting, July 25 and 26.

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