Before the FOMC meeting markets were under triple option for the future course of the US economic development – soft landing, hard landing or no-landing. After the FOMC meeting on Wednesday, markets were left with only “higher for longer” rhetoric. As per Fed officials, that means that interest rates should stay at higher levels at least until the end of the next year, including at least one more rate increase till the end of this year. FOMC members also revised their GDP projection to 2.1% for this year and 1.5% in 2024. Unemployment is expected to reach 4.1% during the next year. FOMC meeting results were a huge surprise for markets, which reacted in a negative manner. Both equities and Treasuries dropped after the Fed Chair Powell's speech. The S&P 500 had another hard week, which ended at the level of 4.320.
During the whole previous week the index was moving to the downside, losing 2.9% of its value. The market sentiment is clearly changed, considering the latest development, in which sense, some further corrections might be possible in the coming period. As for the week ahead, S&P 500 moved close to the oversold side of the market, as measured by RSI index. Considering its strong push to the downside, some short reversals are possible in the week ahead. As per current charts, the level of 4.400 might be a potential target, but with some lower probability. In any case, the market will spend some time testing the 4.350 support line.
During the whole previous week the index was moving to the downside, losing 2.9% of its value. The market sentiment is clearly changed, considering the latest development, in which sense, some further corrections might be possible in the coming period. As for the week ahead, S&P 500 moved close to the oversold side of the market, as measured by RSI index. Considering its strong push to the downside, some short reversals are possible in the week ahead. As per current charts, the level of 4.400 might be a potential target, but with some lower probability. In any case, the market will spend some time testing the 4.350 support line.
