S&P 500, Nasdaq 100, and Dow Jones Forecasts and Analysis
- Fed speak blackout may leave equity markets in limbo.
- US inflation is the headline data release.
- Triple Witching Friday – watch the last hour of trade.
US equity markets are pushing back off their multi-week lows as we head into the weekend as traders adopt a more risk-friendly stance after the recent, sharp sell-off. While this may please some market participants, the ongoing drive by the Federal Reserve to tighten monetary policy and push down on inflation continues and is set to be the dominant driver of price action in the weeks and months ahead. All three major indices are around 3-5% off their lows with the moves not looking overly convincing at the moment, with an ongoing negative bias confirmed by overhead technical pressure from all three simple moving averages. While this remains the case, any move higher may struggle for traction.
Nasdaq 100 – Daily Chart
S&P 500 – Daily Chart
Next week the Fed speak stops ahead of the September 21 FOMC meeting, a blackout period that can leave markets in limbo. Recent Fed commentary has confirmed the central bank’s fight against inflation and financial markets are currently pricing in an 86% chance of another 75 basis point rate hike on September 21.
And this lack of commentary may hinder markets next week with a slew of high-importance data releases set to hit the market, including the latest look at US inflation. Yesterday US Treasury Secretary Janet Yellen said that falling gas prices may push inflation lower in August. US gas prices have fallen for 80 days in a row, and headline inflation may turn negative in next week’s reading, as it did in July. Two consecutive negative monthly readings may underpin risk markets ahead of the Fed meeting.
Next Friday a quarterly event that injects a dose of volatility into the market one hour before the bell rings. The Triple Witching event sees the quarterly expiration of stock options, stock index futures, and stock index options contracts. Trading volume and volatility normally increase sharply during the last trading hour of the day in both the stock and index options and the underlying asset classes. Traders aware of this volatility event also start hedging or unwinding their various positions ahead of this event to steer clear of any sudden market shifts.
For all market moving data releases and economic events see the real-time DailyFX Calendar.
What is your view on US Indices – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
