Weekly Market Update & SPY Technical Analysis
The Federal Reserve is set to hold their third FOMC meeting of 2024 this week, which could set the tone for the new month that we’re transitioning into. April proved to be a very volatile month for markets due to lingering inflation, rising geopolitical tensions, and mixed earnings; however this week’s events will give markets a clearer picture of where The Fed stand on monetary policy and how some of the biggest companies on the market performed last quarter.
Despite the excellent progress on inflation, odds of an interest rate cut in this week’s FOMC meeting have dwindled down to near zero percent. Investors started off this year hopeful that we’ll see a rate cut by summer as inflation cools, but several economic reports have reflected an uptick in the last two months. Last week’s PCE report showed inflation at 2.8%, significantly lower than its highs of 9.1%, but still not below The Fed’s 2% target.
So what does this mean for the market?
Inflation has been the biggest battle for the U.S. economy since the pandemic, it has eaten away at consumer spending abilities and has changed how consumers shop, ultimately impacting company earnings. Companies have also had to adjust to rising costs and higher interest rates, which have posed ramifications on their bottomline.
The two primary influences that move markets are the central bank’s policies and company earnings, which are both in question this week. Markets may not expect a rate cut this week, but they will be paying close attention to Jerome Powell’s speech following the interest rate decision. Several members of the committee have toned down their optimism on the progress against inflation, so markets will be listening for clues on where The President of The Federal Reserve stands.
As far as company earnings go, this week is filled with key reports from companies such as Amazon, AMD, Qualcomm, Apple…etc. The four companies mentioned are the biggest ones on watch because they will likely have the most influence on the technology sector, which holds the most weight in the market. AMD and Qualcomm earnings are especially important this week because they’re considered leaders in the semiconductor and artificial intelligence space. Semiconductor stocks have been some of the best performers this year, but many have questioned their valuations, some stating that we’re seeing a “bubble” forming because of artificial intelligence. AMD and Qualcomm have a chance to alleviate those worries if they report strong numbers on their quarterly report.
SPY technical analysis:
Chart done on hourly timeframe. SPY managed to close out the week strong last week after earnings from Google and Microsoft sent markets higher, but this week’s events can easily change its course so don’t get too comfortable yet. Volatility will increase through FOMC and earnings, but we have support and resistance points to guide us through it. Our first resistance in focus this week will be 510.55, buyers need a move above that level to gain confidence and push to the next target of 515.00-516.00. Supports are 502.45 and 493.85. A move below 493.85 can send markets sharply lower.