Nasdaq-ADV: 2,726 Dec: 7,628 NYSE-ADV: 1,175 Dec: 2,985
(Source: Nasdaq)
The US stock market which was rocked by President Donald Trump on foreign import tariffs faced the Federal Reserve meeting in the coming week, because investors sought instructions on further interest rates that could restore some peace to the market.
Slides for weeks in stock accelerated in the last few days with the S&P 500 (.SPX) benchmark, on Thursday confirmed that it was in correction, ending more than 10% of the highest record of February 19. This decline has removed the market value of more than $ 4 trillion, with some of the highest wall street leaflets such as Nvidia (nvda.o), and Tesla (tsla.o), becoming pummeled.
The Fed’s latest monetary policy meeting came because Wall Street was increasingly worried about economic slowdown, with the worried worries by Trump to increase the tariff war.
The US central bank is widely expected to withstand stable interest rates on Wednesday, but investors anticipate slaughtering at the end of the year and will look for signs that FED might prepare to move.
“The stock market is trying to get all kinds of insights about when Fed will be comfortable enough to apply the next interest rate,” said Dominic Pappalardo, Head of Multi-Asset Strategy Expert at Morningstar Wealth. “I don’t think the news attacks and new policies coming from the White House will stop in the near future.”
Prospects for cutting tariffs win this week’s push with benign consumer price data that brings assistance about inflation. The inflation rate has cooled since 2022 when the Fed began its tariff climbing cycle, and while it remains above the annual target of 2% of the central bank, disappointing economic data recently can begin to be more prominent.
“The first step that the stock market wants to see is that they indicate that the focus is shifting again to support the economic activities of the inflation battle,” Pappalardo said.
Investors over the past month have increased bets in more easing this year, with Fed Futures funds showing around three cuts of one quarter point expected to 2025, compared to the current level of 4.25%-4.5%, according to LSEG data.
It is important to be a comment from Chairman of Fed Jerome Powell in his press conference after the monetary policy decision was announced.
“The market has been brushed by The Fed” for the past few weeks, said Walter Todd, Chief Investment Officer at Greenwood Capital. “If he pushes back hard to the re -price we already have in the futures market, then that can be a problem.”
Meanwhile, some leading strategists become more gloomy to economic prospects and for US shares. Goldman Sachs dropped the target of the end of 2025 years for the S&P 500 to 6,200 from 6,500, while Yardeni Research dropped the “Best Case” target for the index to 6,400 out of 7,000. S&P 500 ended on Thursday at 5,521.52.
Volatility has increased with the CBOE volatility index (.Vix), this week reached the highest level since August before receding.
Tariff news still tends to be at the forefront for the market in the coming week, with analysts say the levy can bite the company’s profits and raise consumer prices.
In the latest Salvo, Trump on Thursday threatens a 200% tariff in all wine and other alcoholic products from Europe. The day before, the European Commission said it would impose a reply tariff on US goods worth $ 28 billion in response to US tariff blankets on steel and aluminum.
While the Fed has become a “center of attention” for the market in recent years, other policy dynamics tend to push the market in the next few months, said Nathan Thooft, Chief Investment Officer for equity and multi-asset solutions at Management Investment Management.
“A bigger story might still be alternating that we continue to see at the front of the tariff,” said Thooft.
Source: Reuters (Reporting by Lewis Krauskopf Editing by Nick Zieminski)
