The U.S. Federal Reserve (Fed) is about to hold an interest rate meeting next week, and major U.S. stock indexes closed in black on Friday (9th). Analysts believe that the Consumer Price Index (CPI) report to be released next Tuesday and the Federal Reserve The December interest rate meeting will be the two key factors for whether the U.S. stock market will rebound at the end of the year.
The S&P rallied about 10 percent on Friday from October lows, but remains down more than 17 percent so far this year, with the index stalling this week as stronger-than-expected economic data fueled concerns over a hawkish Federal Reserve and recession fears.
Analysts believe that the trend of US stocks in the rest of this year may depend on the CPI report released next Tuesday. The higher-than-expected data may intensify people’s concerns that the Federal Reserve will become more hawkish, thus putting pressure on the stock market.
David Lefkowitz, head of U.S. equities in the UBS Wealth Management Office of the Chief Investment Officer, said: “Usually around the CPI report, the market is quite volatile, and I think the market will still be the same when the data comes out next week.
The market expects that the US November CPI data released next Tuesday will increase by 7.3% year-on-year, with a monthly growth rate of 0.3%, and the core CPI monthly growth rate will be 0.3%.
At the same time, the Federal Reserve will hold an interest rate meeting on December 13-14. Wall Street expects the Fed to announce a 2-point rate hike and slow down the pace of interest rate hikes after a 3-point rate hike.
Wall Street is expected to pay more attention to the Fed’s forecast for terminal interest rates and Fed Chairman Jerome Powell’s related comments on the recession.
The bond market has been releasing recession signals recently, with 2-year and 10-Year U.S. Treasury YieldThe curve has deteriorated recently, hitting its highest level in at least nearly 20 years.
Yields on shorter-dated U.S. Treasuries exceed those on longer-dated U.S. Treasuries, a condition known as an “inversion” (also known as an inversion) of the yield curve. The yield curve has been used by the market as a reliable predictor of economic recession. Although this does not mean that the economic recession is coming, it may appear in the next 1 to 2 years or so. The market usually focuses on 10 years minus 2 years, or 10 years minus 3 years. Monthly bond spreads.
Some analysts expect large funds with lots of cash and seasonality could help drive a year-end rally in stocks if the CPI data falls short of expectations or investors take comfort with the Fed’s comments.
“Stock Trader’s Almanac” (Stock Trader’s Almanac) shows that the S&P has risen 1.5% in every December since 1950, the third best performance of all months. This year, the S&P has lost 3.6% so far in December. %.
Walter Todd, chief investment officer of Greenwood Capital, predicted: “If there are no major surprises in CPI and Fed policy, it is expected that seasonal factors will allow investors to usher in a rebound at the end of the year.”
However, some analysts believe the recent bear market rally is over. Morgan Stanley strategists warned clients earlier this week of the risks to corporate earnings and urged investors to shift to defensive sectors such as health care and utilities.
Morgan Stanley strategists advise investors: “Take profits before the bear market actually returns.”