The Fed is likely to be decisive for Wall Street tonight
The US stock market is consolidating pending the outcome of the Fed meeting on Wednesday evening. The release of US inflation figures on Tuesday failed to provide a clear direction to the market. The main indices have corrected their sharp rise caused by the larger than expected slowdown in US inflation.
Rather, market operators appear to be waiting for the Fed, which should slow down by raising its interest rates by 50 basis points. The main focus will be on the new FOMC projections and Jerome Powell’s press conference.
The risk is that the average terminal rate expected by FOMC members will be revised significantly upwards, beyond 5%, as operators currently expect a terminal rate of 4.8%. This would mean that the Fed is more hawkish than market operators and therefore shows that it is determined to curb inflation despite the rising risk of recession.
After the Fed, the industrial production numbers released on Thursday will be closely watched given the drop in the ISM manufacturing index below 50% last month. A decline in industrial production will bode very badly for the economic outlook.
Nasdaq 100 Daily Price Chart – Key Levels