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14.09.2022 02:55 PM
US stock market down on more rate hikes expectations

The stock market may face more losses due to the higher-than-expected inflation data. Now Wall Street has to face the reality: inflation shows no signs of a slowdown and rises instead. Therefore, the US Federal Reserve will maintain its policy of rate tightening and may even take more aggressive steps in the near term. This view is shared by many Wall Street analysts and investors.

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"After next week's rate hike, we're going to start playing a dangerous game with the state of the economy. The next rate hike is going to be only the second time in 40 years that the Fed funds rate is going to exceed the prior peak in a rate hiking cycle," the Bleakley Advisory Group chief investment officer commented on the issue.

Obviously, the Fed is determined to raise the rate by 3/4 points at its meeting next week even despite signs of lower commodity prices and a slowdown in used car prices. The recent report is unlikely to change the stance of the regulator.

The consumer price index for August rose by 0.1% to 8.3% over the past year. The thing is that a meaningful drop in gasoline prices failed to offset rent, food, and medical care costs. Economists expected the index to fall by 0.1%. Unless energy prices had dropped, it would be hard to imagine the actual results for August.

Premarket trade

Starbucks shares added almost 1% after the company upwardly revised its long-term forecast and said it expected double-digit growth for revenue and earnings per share in the next three years.

Nucor securities fell by 5% after the steel producer issued a disappointing third-quarter earnings forecast. The company expects earnings per share to range between $6.30 and $6.40, well below the forecast of $7.56.

SoFi Technologies gained more than 2% after Bank of America upgraded the fintech stock to a higher level from neutral. "We see potential for a meaningful catalyst path over the next few quarters," the bank commented.

Shares of Moderna rose by 0.6% after the company's CEO said it would be open to supplying covid vaccines to China.

As for Merck & Co., its shares advanced by 0.7% in the pre-market trading after Berenberg upgraded their status to "buy" from "hold."

Railroad stocks dropped on Wednesday as the sector is facing a potential strike that could limit service. Union Pacific slid by 1.9% while CSX and Norfolk Southern Corp. also lost around 0.1% ahead of the market opening.

As for the technical outlook for the S&P 500, bulls are trying to regain ground near the level of $3,940 although there are no drivers for this. To build an upside correction, the quote needs to break above the level of $3,968, which will then open the way towards $4,003. A breakout of this range will support the new upward momentum aimed at reaching the resistance areas of $4,038 and $4,062. The level of $4,091 serves as a more distant target. If the downtrend continues, a breakout of $3,942 will send the price to $3,905. In this case, the instrument will again hit the low of $3,872 and then $3,835 where the downward pressure may slightly ease.

Jakub Novak,
Especialista em análise na InstaForex
© 2007-2025
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