SP500 Tested New Highs As Fed Kept The Federal Funds Rate Unchanged
SP500 managed to gain some ground as traders reacted to Fed decision and focused on comments from Fed Chair Warsh.
Fed decided to leave the federal funds rate unchanged, in line with analyst estimates. In the FOMC Statement, Fed noted that economic activity was expanding at a strong pace but inflation was elevated.
Two Fed members, Lisa D. Cook and Beth M. Hammack, voted to raise the target range for the federal funds rate by 1/4 percentage point.
During the press conference, Warsh said that he did not believe in forward guidance. He also noted that political factors had no impact on Fed decision.
Warsh believes that Fed needs more information before making the next decision. According to Warsh, the central bank will likely have sufficient information in December.
Warsh did not disappoint markets, but some traders may focus on the fact that two members voted for a hike at this meeting.
The yield of 2-year Treasuries pulled back towards the 4.70% level as bond traders viewed Warsh’s comments as dovish. The yield of 30-year Treasuries moved above the 5.36% level as bond traders worried that a dovish Fed would not contain inflation in the long term.
Traders will also stay focused on the Middle East. Oil prices are rising as traders bet that U.S. and Israel will restart the military operation against Iran after midterm elections. In this scenario, oil prices may test new highs, which could force the Fed to raise rates at the next meeting in December.
Tech stocks were among the biggest gainers in the SP500 index today. Energy stocks have also moved higher amid rising oil prices. Real estate and utilities stocks pulled back.
In case SP500 stays above the support at 7720 – 7730, it will head towards the nearest resistance level, which is located in the 7780 – 7790 range. On the support side, a successful test of the support at 7720 – 7730 will push SP500 towards the 50 MA at 7700. In case SP500 declines below the 50 MA, it will head towards the next support level at 7615 – 7625.
NASDAQ Was Mostly Flat As Traders Focused On Warsh’s Press Conference
NASDAQ continues its attempts to settle above the resistance level at 29,700 – 29,750 as traders focus on Fed decision. At this point, the pullback in shorter-term Treasury yields did not provide sufficient support to the NASDAQ index.
In case NASDAQ manages to settle above the 29,750 level, it will head towards the resistance, which is located in the 30,150 – 30,200 range. RSI is in the moderate territory, so there is enough room to gain momentum in the near term.
On the support side, a move below the 29,600 level will open the way to the test of the 50 MA at 29,434. If NASDAQ declines below the 50 MA, it will head towards the support level at 29,250 – 29,300.
Dow Jones Price Forecast
Every new Dow Jones analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Dow Jones forecastsDow Jones Remains Stuck Near Key Support Level
Dow Jones is mostly flat after Fed decision. Traders will continue to evaluate comments from Fed Chair Warsh in the upcoming hours.
If Dow Jones manages to settle below the support at 52,300 – 52,400, it will head towards the next support, which is located in the 51,700 – 51,800 range. On the upside, a move above the 52,600 level will push Dow Jones towards the resistance level at 52,800 – 52,900.
For a look at all of today’s economic events, check out our economic calendar.