Hawkish Fed sends SPX500 below 4400

 
The SPX500 has retreated below 4400 round number on the Fed’s hawkish comments regarding the possibility of another rate hike this year, despite leaving its benchmark rates unchanged yesterday,

At the moment the market expects a 31.5% chance of a rate hike in November & 39.0% chance in December.

Fed’s revised 2023 macro-economic outlook, now indicating a higher GDP growth at 2.1% (up from 1%) and a decrease in unemployment to 3.8% (down from 4.1%), signals a continuation of inflationary risks.

Adding to the uncertainty, rising energy prices may push the Fed to take a tougher stance during the next policy meeting.

While the market awaits for any further macro-economic clues, SPX500 bulls may find themselves under pressure as investors may book more profits after a stellar AI-fuelled run up earlier this year, while potentially re-shuffling their portfolios with a “safer” asset classes.

From a technical perspective the 100-SMA is set to provide immediate support at 4391.

A possible consolidation pattern may form around 4400.

If the downward momentum continues an SPX500 may reach the 4330 region, which supported cycle lows in late-June and mid-August, while also marking the 50% Fibonacci level from its May-July ascent.