Wall Street reacted very positively to last week's speech by Fed Chair Powell , focusing on his signal to a smaller rate hike at next week's upcoming, a move that is supported by the soft CPI report. As such, SPX500 concluded its second straight profitable month and kicked-off December with three-month highs.
Chair Powell however had also spoken of a higher terminal rate than previously expected and the need to keep policy at a restrictive level for sometime. During the current week, sentiment sours as a series of strong US data seem to have made markets reassess the Fed's tightening path and prospects of a recession.
The easing of China's pandemic measures has not done much to assuage those fears, as infections remain high, while the latest trade data from the world's second largest economy were once again disappointing.
As such, SPX500 sheds more than 3% since Monday which exposes it to 3,870 and the 38.2% Fibonacci of the October low/December high rally. Further slide towards and beyond 3,98 though, has a high degree of difficulty at this stage.
On the other hand, SPX500 finds reprieve today, trying to defend EMA200 and halt its five-day losing streak. The upside bias is not yet canceled and the index can reclaim the 4,000 handle, but a significant improvement in sentiment will be required for challenging 4,090-4,104.
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Retrieved 03 Oct 2023 https://www.federalreserve.gov/newsevents/speech/powell20221130a.htm