S&P 500, Fed Price Analysis & News
- Fed’s Punchbowl is Here to Stay
- Second Wave Concerns on the Rise
- S&P 500[1] Looking to Test Support on the Pullback
Equity markets under pressure post the Federal Reserve monetary policy decision, however, with Powell and Co. making it clear that the Fed’s punchbowl is here to stay, this pullback in risk appetite looks to be an overdue retracement. Keep in mind that equities have seen a stellar month so far with the likes of the Dow Jones[2] up over 6% this month, while the Nasdaq[3] 100 broke to a fresh record high having hit the 10,000 milestone. That said, this pullback will look test the confidence of tactical dip buyers.
Fed Recap: While the Fed noted that the economic outlook remains highly uncertain, despite subtle signs of a recovery, most notably from the NFP[4] report. The Fed’s dot plot highlighted that rates will be going nowhere over the forecast horizon to 2022 with Chair Powell echoing this stance by stating that the “Fed not even thinking about thinking about rate hikes”. In turn, this underscores the fact that with the Fed put in place investors have been able to overlook the dire consequences of the coronavirus crash for the time being.
Second Wave Concerns: As economies go back online from lockdown, it is worth keeping an eye on the coronavirus case count to assess whether a second wave is on the way. On the whole, while reopening economies have been a relatively smooth operation, there have been some red flags across US states with Texas recording its largest 1-day total, Florida saw the most cases in any 7 days, while California saw the highest hospitalisations in a month.
