S&P 500 (SPY) Report – 05/03/23
Good morning traders!
The S&P 500 ($SPY) is trading near yesterday’s close. Let’s get into it…
US stock futures rose slightly on Wednesday ahead of the Federal Reserve’s decision on another increase in interest rates. The Fed is expected to announce another quarter-point interest rate hike, which some market participants anticipate could be the last of the cycle, bringing the federal funds rate target range to 5.0%-5.25%. However, Chairman Jerome Powell could confirm or steer away from these assumptions in his press conference following the decision. The bigger question looming is what officials may signal about another potential tightening at their June meeting.
Meanwhile, inflation remains high, the labor market is still hot but softening, and the economy is resilient. Recent bank failures could set up the case for a pause, along with the Treasury Department’s new projections adding more caution to the mix as lawmakers may have less than a month to reach a debt-ceiling deal. Despite these uncertainties, hiring at private companies unexpectedly rose by 296,000 for April, above economists’ call for 148,000, according to payroll processing firm ADP. The ISM services index results are also on tap Wednesday morning. However, the sale of First Republic Bank’s assets to JPMorgan on Monday did not appear to have quelled investor fears in the banking sector. The S&P 500 regional banking index fell as much as 1% Wednesday morning, and individual regional bank stocks that bore the brunt of sell orders Tuesday, including shares of PacWest Bancorp, are still lower by as much as 5% in premarket trading.
It is recommended that traders exercise caution this week due to the FOMC meeting and expected rate decision, which may result in significant market volatility. It’s important to wait for confirmation and avoid making impulsive trades.
Wednesday Economic Events:
MBA Mortgage Applications 7:00am ET
ADP Employment Report 8:15am ET – High Volatility Expected
Treasury Refunding 8:30am ET
PMI Composite Final 9:45am ET
ISM Services Index 10:00am ET – High Volatility Expected
EIA Petroleum Report 10:30am ET – High Volatility Expected
Fed Speaker Scheduled:
FOMC Announcement 2:00pm ET – High Volatility Expected
Fed Chair Press Conf. 2:30pm ET – High Volatility Expected
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