Next week is key for global equity markets. And over the next few days, central banks will meet to talk about inflation and interest rates. Specifically, the Fed will decide on economic policy on Wednesday, May 3rd, while the ECB will do so a day later, on May 4th.
The movements of the major Wall Street indices depend very, very much on what the Fed says and does, but also on the subsequent message from Jerome Powell and how the market interprets it. “After interest rates are released, you never know what the markets will do. The Fed’s messages are always a double-edged sword, so you have to see what happens next and how investors interpret it,” he says independent analyst Monica Triana. In this sense “a pigeon message That this means the end of interest rate hikes can be interpreted as a good thing for technology companies, which due to their heavy weighting in the indices are starting to rise and sweeping the market, or on the contrary, it can be interpreted as The Fed already has too many things destroyed and pessimism would lead to price losses on the stock markets. On the other hand, A hawkish message It could also have a dual interpretation: that the economy is still strong, inflation will continue to rise and monetary policy will continue to be tough and therefore both could be technologically damaged, or quite the opposite,” Triana elaborates.
Key Resistances on Wall Street
The Fed meeting is also taking place in full harvest seasonIn which banking numbers, and particularly those released last week by US regional bank First Republic Bank, are crucial due to resurgent fears of a banking crisis and are being pushed lower in recent sessions on the New York Stock Exchange.
“However, it’s important to note that Refinitiv Data is forecasting a 3.2% drop in earnings for the SP&500 in the first quarter of 2023, which is good news given that it’s better data than the June 1 estimate.” an average decrease of 5.1%. Therefore, everything suggests that they are better than expected, since the announcement of earnings expectations and the deviations from what moves the stock, and not the benefits themselves, can end up being good news “, stresses the independent technical analyst Carlos Gil.
As for indices, over the past five days, the DOW JONES Ind Average is up only 0.10%, the S&P 500 is up 0.08%, and the NASDAQ 100 is up 1.46%. In this way, the technology index dominates gains in the United States for the full year, rising 21.15% and trying to erase the 33.1% losses recorded in 2022. For its part so far in 2023 the DOW JONES Ind Average is content with a rise of 2.10% and the S&P 500 is up 8.1%.
However, recent bearish days in the US have made investors nervous, wondering what key resistance would need to be met to avoid negative thinking. With that in mind, Carlos Gil points out that “it would be interesting if between now and March 3rd the NASDAQ 13,190 areathat it breaks to the upside and that both the S&P 500 accompanies this upside break and surpasses 4.200 pointsand the DOW JONES Ind Average exceeds the 34,725 points. If that were to happen we could see an interesting upside reaction and put those fears that we initially had behind us.”