Has S&P 500 Support Broken? Yes… sort of. The market closed at 3,899 on Monday and appears to be holding. The main question is how tomorrow’s announcement by the Federal Open Market Committee will affect the market. We’re pretty sure they’ll hike rates by 0.75% as expected.
In this week’s live stream We can assure you of one thing as to why we don’t expect the Fed to continue raising rates. However, traders are in a bit of limbo. But again, we’re optimistic that the Fed will live up to expectations on Wednesday and that stocks have a good chance of recovering into Friday. Until the announcement is made, aimless volatile trading is the most likely outcome.
Technology, Tesla and social media
This week we addressed questions from some concerned traders at the Fed announcement and discussed some interesting viewer questions about specific stocks. If you have any questions of your own, just drop a line in the comments section or email us at firstname.lastname@example.org.
- Can we take a look at Microsoft? – John P
- Tesla has been relatively strong compared to other stocks in the tech sector of late. What do you think about Tesla up? – Steven G
- Can you comment on Adobe and the recent purchase of Figma (a private technology company)? – Kristen J.
- What about Twitter and other social media? Do you find it useful for market analysis? – Gregory B.
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Stocks fall on disappointing retail sales
Last weekend’s live streamwe covered a somber one fedex corp (FDX) Earnings release and market reaction to some different retail reports.
FedEx provided a poor earnings report after Thursday’s closing bell. The delivery company will take cost-cutting measures, including grounding planes, fewer Sunday deliveries and closing company offices. As consumers spend less online, FedEx has taken a hit. Other delivery companies like United Parcel Service Inc. (UPS) suffered a sympathetic hit, but the market seems to have recovered this week. FedEx rose 1% on Monday after plummeting 21% on Friday following the earnings release.
To add to FedEx’s misery, the Consumer Price Index (CPI) Data was released late last week. Consumers make up 70% of the US economy and their budgets are being squeezed by inflation that has been slowly receding. Headline prices fell 0.2% from July but are up 8.3% from the same time last year. Persistently high prices mean less spending, and unless consumers spend, the US economy may not see a soft landing as the Fed hikes interest rates to fight inflation.
The University of Michigan Consumer Confidence Index came out slightly more positive at 59.5 on Friday, higher than the August reading of 58.2 but slightly below the market expectation of 60. The index measures consumer sentiment around inflation, prices and spending . It appears consumers are more optimistic about the prospect of inflation dampening spending than they were when gas prices peaked earlier in the summer, which is good news. We expect a promising earnings report this week Costco Wholesale Corp. (COSTS), one of the defensive consumer stocks we like. It should tell us a bit more about consumer spending as we await other reports in the sector.
The market is rolling with the beats and luckily holding its ground and hovering around the 3,900 support. This means that we are not in bear market territory anytime soon. You always hear us say to buy at the dips and we stick to it. These are the windows that create buying opportunities.
John Jaegerson & Wade Hansen
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