Over the next 13 trading days, four significant events will be influential. It will decide whether the year’s stock market recovery will continue or stop after its February downturn.
Tuesday marks the commencement of Federal Reserve Chairman Jerome Powell’s two-day testimony on monetary policy on Capitol Hill. After a successful week in the S&P 500 Index, investors will look to Powell for any clues about the direction of the central bank’s rate hike.
Possibility of Rate Hike Pause
Last week, Raphael Bostic, head of the Atlanta Fed, encouraged the rally, noting that the central bank might take a break during the summer. Jerome Powell’s statement, followed by the February jobs report and consumer-price index is set to release on March 10 and 14, respectively. There is a potential for positive results that could shatter expectations of the Fed’s ability to reduce anytime soon.
On March 22, the Fed’s policy decision and quarterly interest-rate projections will be announced. A press conference with Chairman Powell will follow this. Investors will be able to understand if the Fed will be pausing its rate hikes at any point soon.
Investors are apprehensive regarding market shifts, as implied volatility dropped to the low thirties on Consumer Price Index day. According to data compiled by Citigroup, it is reaching forty on the day of the Federal Reserve rate decision. Furthermore, the implied volatility reading of twenty-six on the day of jobs data implies that the market underestimates the associated risk. Stuart Kaiser, the head of US Equity Trading Strategy at Citigroup, highlighted this.
Calmness prevailed recently in the stock market, as the S&P 500 showed less than a 0.5% shift in any direction. This calm was not seen in January when investors seemed confident that the US could avoid a recession as inflation ebbed.
The trader will look at the following events this week:
Powell Testimony
The Fed Chair is set to deliver a biennial report on the US economic forecast to the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. Traders will watch inflation, wage pressures, and employment forecasts keenly and see if the Fed has any plans.
Jobs Report
January saw a strong labor market, which had a major impact on inflation because of higher wage potential. There is a threat to stock prices as Fed’s ability to pause its rate hikes suffer due to sticky inflation persists. The economists anticipate the February unemployment rate will remain at the January level of 3.4%. However, there will be a decrease in the growth of nonfarm payrolls from 517,000 to 215,000. The decisive factor is ultimately the wages and whether the Fed believes it is slowed down to decrease inflation.
What is the CEO’s forecast for the economy in 2023?
For most of 2023, most CEOs predict modest or no economic growth. 60% of US CEOs anticipate their region’s growth will increase again in late 2023 or mid-2024. 51 percent of CEOs worldwide anticipate that their region will experience growth again in late 2023 or mid-2024. To know more details, you may go through – rajkotupdates.news : indian ceos expect economic growth
Inflation Data
The February Consumer Price Index (CPI) reading is significant due to its large leap at the beginning of the year. If there is evidence of enduring inflation, it may cause the Fed to raise interest rates further than expected. Forecasts of February’s CPI are estimated to increase to 6%, an improvement from January’s 6.4%. Core CPI is anticipated to climb 5.4% from February 2022 and 0.4% from a month prior. The Fed’s target inflation rate, taking into account more than just the CPI, is set at 2%.
