Good morning traders!
The S&P 500 ($SPY) is trading below yesterday’s close. Let’s get into it…
Stock futures are trading lower this morning after the Federal Reserve raised interest rates by 25 basis points and new fears have emerged in the regional bank sector. PacWest shares dropped by over 35% in premarket trading, with Western Alliance falling 19.2%, and Zions Bancorporation dropping 11.3%. Jeffrey Gundlach, CEO of DoubleLine, predicts that the regional banking sector will not experience any relief until the Fed cuts interest rates. Although the central bank has softened its language on future rate increases, Jerome Powell has suggested that it may be too early to cut rates.
The Fed is adopting a more data-dependent approach to determine if further hikes are needed, with upcoming jobs data taking on greater importance as investors seek evidence that a recession can be avoided. Markets are expecting a rate cut as early as September, which implies that investors are predicting a sharper downturn than the one anticipated by the Fed. Key economic reports, including initial jobless claims and April’s payrolls report, are forthcoming and will inform the Fed’s future steps.
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.
Thursday Economic Events:
Challenger Job Cut 7:30am ET
Int. Trade in Goods 8:30am ET
Initial Jobless Claims 8:30am ET – High Volatility Expected
Productivity and Costs 8:30am ET
EIA Natural Gas Report 10:30am ET
Fed Speaker Scheduled:
No Fed Speakers Scheduled
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