Chart done on hourly timeframe. One of the most eventful weeks of the quarter is ahead for the markets this week. The Federal Reserve will be holding their two-day policy meeting where they’ll give an update their monetary policy outlook and decide on interest rates. The Feds left rates unchanged in their last meeting as inflation numbers cooled down, but some sources are reporting a 90% chance of a rate hike this week, we’ll find out the answer Wednesday.
Apart from FOMC, markets are preparing for earnings from many large cap companies such as Meta, Google, Microsoft, Coca-Cola, Boeing, McDonald’s…etc. Last week’s earnings from Tesla and Netflix drove markets down despite both companies mostly meeting expectations. Many tech companies are vulnerable this earnings season because tech stocks have been driven to higher valuations in the recent market rally, so investors wanted a STRONG beat on earnings, not just a moderate beat. After the drop off on Tesla and Netflix, other names began to follow as traders unloaded positions, scared of their stocks following the same post-earnings fate.
Last but not least, the second quarter GDP estimate is expected on Thursday along with the PCE report on Friday. The final reading of the first quarter recorded a 2% growth for the U.S. economy, so investors want to see a strong projection of the second quarter. Remember, markets are forward looking, so growth projected in the future means stocks will go up now. The Price Consumption Expenditures Index (PCE) is another inflation report. The last reading showed a MoM decline in inflation so of course, investors and everyone else wants to see the cool down trend in inflation.