⏰Wall Street braces for tomorrow’s Fed meeting and big-tech earnings
US100 erased early losses and rose over 1.0% during today's session as traders are still weighing bets about whether the FED will ease its tightening path on Wednesday and bracing themselves for reports from 4 US mega-tech companies, which are expected to create a lot of volatility. Meta Platforms will be the first of those with a report coming out on Wednesday after the close of the Wall Street session. Q4 financial reports from Alphabet, Amazon and Apple will follow a day later, on Thursday (also after the close of the Wall Street session).
Meanwhile, the Fed on one hand is expecting slow rate hikes to 25 bps, while upholding its hawkish rhetoric, even though most likely we will not see a series of hikes, but only 2 moves by 25 bp. Fed's Waller, known for his rather hawkish comments, stated that interest rates will be at restrictive levels if they are 1.5-2.0% higher above the inflation estimate at the end of the year. The Fed indicates that inflation will slow down to 3.1% at the end of the year. In this case, the restrictive level would be assessed in the range of 4.5-5.0%, which means that in March we may see the end of the tightening cycle.
Also fresh data reinforced expectations that FED will raise rates only by 25 bps on Wednesday. The Bureau of Labor Statistics report pointed to a further slowdown in labor costs, while Chicago PMI and US Conference Board Consumer Confidence index both contracted in January. Recent data shows that hikes are taking a toll on the economy, the question is how far FED is willing to go?
US100 bounced off support at 11,860 points, which is marked with the lower limit of the 1:1 structure and managed to return above the 100 EMA, as well as above the psychological resistance at 12,000. pts, which may herald a [potential resumption of the upward trend. Source: xStation5
