Good morning traders!
The S&P 500 ($SPY)is trading above yesterday’s close. Let’s get into it…
Stock futures are trading higher this morning in response to the latest data on inflation, with yesterday’s release of the Consumer Price Index (CPI) and Producer Price Index (PPI) indicating a slowdown in price increases. Despite the economy not being as bad as initially feared, there are still concerns of a possible recession. The Federal Reserve predicts a mild recession by year-end, while the International Monetary Fund expects a significant global growth slowdown. Inflation is expected to decrease, but it remains too high, leading to another likely interest rate hike in May.
Yesterday, stocks fell after the release of the Federal Reserve’s March meeting minutes, which indicated that further rate hikes have not been ruled out, despite concerns about the banking sector and scaled-back expectations for rate hikes. Core inflation remains above the Fed’s target, and investors will continue to monitor this data for clues on whether the Fed will raise rates at its next meeting. The Bank of Canada left interest rates unchanged, while U.S.-listed Chinese stocks fell.
Although the recent banking sector turmoil still casts a shadow over the economy, there are some positive signs, such as better IMF forecasts and a strong stock market. Investors are still seeking good companies at fair prices and are not seeing the recession talk as a strong sell signal.
The $SPY is currently finding support at its 50-day Simple Moving Average on a 4hr chart, while also making recent higher lows. This may suggest a potentially bullish market sentiment for the day. However, it’s important to note that the S&P closed on a weak note yesterday, indicating that bearish investors are still present. We strongly recommend that traders exercise with caution today due to ongoing investor digestion of recent economic data, which we expect to cause volatility throughout the week.
Thursday Economic Events:
Initial Jobless Claims 8:30am ET – High Volatility Expected
PPI-Final Demand 8:30am ET – High Volatility Expected
EIA Natural Gas Report 10:30am ET
Fed Speaker Scheduled:
No Fed Speakers Scheduled
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