Stocks gain on Powell dovish remarks, outlook remains cloudy – Stock Market News



Major US indices realised broad gains on Wednesday after Federal Reserve Chair Jerome Powell reaffirmed that the Bank will most probably slow down the pace of its aggressive monetary tightening. Moreover, risky assets got an additional boost after China announced that it will soften some Covid-19-related restrictions. However, many market participants endorse that the latest upswing in equity markets is bound to fizzle out soon as recession fears have not yet been fully priced into corporate valuations. Is this the case?

Stocks extend rebound

US stocks ended November on a solid note on the back of Powell’s speech, which opened the door for smaller and slower interest rate increases by the Fed in an effort to achieve a soft landing for the US economy. The latest rally secured Wall Street’s first back-to-back monthly gains since 2021 and sent the Dow Jones more than 20% above its recent low. Nevertheless, it could also be argued that the market appears over-optimistic as Powell’s latest remarks did not add any significant new piece of information that could alter the current policy outlook macroeconomic backdrop.

On Friday, the major US stock indices opened lower and erased some of their latest gains as the stronger-than-expected NFP report applied upside pressure on Treasury yields.

Easing inflation vs slowing growth

Lately, investors have been highly optimistic that the Fed’s campaign against inflation has been successful, increasing their expectations of a more gradual rate hike pace going forward. Even though this is partially true and we are indeed entering a period of softening inflation, market participants continue to underestimate the probability of a severe economic slowdown and its corresponding effect on equity markets.

Historically, equities tend to rebound once inflation has peaked given that a recession is avoided. However, this time, equity investors must cope with an explosive cocktail that includes recession woes, overstretched valuations and extremely high earnings projections for next year. Hence, the latest rebound could be considered naïve and there is a high chance that it could backfire on investors.

Are we entering a new era?

Since the end of the global financial crisis, most central banks around the world have intervened multiple times to control yield curves, which squeezed returns in fixed income assets. This development shifted funds towards stock markets as bonds became essentially a dead asset. However, it seems that this monetary regime has come to an end and many tenors of the yield curve are starting to become fully market derived.

Looking forward into 2023, the big question that lies ahead is whether we are entering a prolonged period of high inflation and central banks have abandoned quantitative easing for good, in which case, bonds could actually offer better risk-adjusted returns than stocks for the foreseeable future.

S&P 500 in crucial technical territory

Taking a technical look, it is clear the S&P 500 index is currently near a very important territory, which could prove to be a good test for the sustainability of the index’s latest advance.

To the upside, if the rally resumes, the S&P 500 index could challenge the crucial 200-day simple moving average (SMA), currently at 4,062. Breaking above its latest trend reversal point, the price could then ascend to test the descending trendline taken from the index’s recent highs before it faces the 4,120 resistance barrier.

To the downside, bearish forces may encounter initial support at 3,907, or lower, the November bottom of 3,700 could curb any further declines.

Dernières actualités

Technical Analysis – USDJPY jumps above a downtrend line


Fourth-quarter GDP print to ease sterling problems? - Forex News Preview



Daily Market Comment – Dollar soars, stocks dive after NFP shock; yen skids on BoJ rumours


Technical Analysis – EURUSD maintains bullish trend despite post-NFP crash

Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.

Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.

Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.

Nous utilisons des cookies pour vous donner la meilleure expérience possible de notre site internet. En savoir plus ou modifier vos paramètres de cookies.

Avertissement sur les risques : votre capital est à risque. Les produits à effet de levier ne sont pas recommandés pour tous. Veuillez consulter notre Divulgation des risques