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US stock market awaits FOMC’s signal on Wednesday


Relevance up to 08:00 2022-01-21 UTC+00

On Wednesday, US stock market indexes continued their fall during choppy trading as investors assessed outlooks for earnings growth amid the potential for monetary policy tightening.

The S&P 500 declined by 0.20% in its fourth straight day of losses due to falling share prices of companies with massive market cap, such as Amazon Inc. Tesla Inc. and Apple Inc. The NASDAQ 100 lost 0.13%. The yield of US treasury bonds fell across the curve, even as expectations grow that the U.S. 10-year will top 2%. USDX decreased for the first time in four days.

Global equities have started the year with high volatility due to the increasingly hawkish position of the Federal Reserve, economic disruptions caused by the Omicron strain, and risks for company profits due to rising costs. Upbeat earnings data from companies such as Morgan Stanley, UnitedHealth Group Inc. and Procter & Gamble Co. underpinned bullish sentiment.

“You have a Fed meeting coming up, so there’s not going to be a lot of movement anywhere until the Fed meeting is over with,” said Jamie Cox, managing partner at Harris Financial Group.

Optimistic sentiment fueled by company revenues and dip-buyers vied with speculation that the Fed may deliver more than a quarter-percentage point March interest rate hike to fight inflation.

In the corporate sector, shares in Morgan Stanley went up following an increase of profitability targets and a surprise increase in equities-trading revenue target. Bank of America Corp advanced amid renewed loan growth, as consumers and companies begin to take on debt again. UnitedHealth stock rose after beating the highest estimate of analysts, while Procter & Gamble climbed thanks to its increased sales outlook.

“We finally got some good news for the banks, but I think the report out of Procter & Gamble was the most compelling news. People have been worried about input costs hurting margins. Since that was not a problem for PG, it seems to be giving the stock market a relief bounce today,” said Matt Maley, chief market strategist at Miller Tabak + Co.

Here are this week’s key economic events:

Thursday: US initial jobless claims report, Philly fed manufacturing index, existing Home Sales data release;

Thursday: EIA crude oil stockpiles data;

Thursday: interest rate decisions due from nations including Indonesia, Malaysia, Norway, Turkey, and Ukraine;

Friday: speech by ECB president Lagarde;

Friday: Canada’s retail sales data.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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