Weekly Stock Market Update & SPY Technical Analysis
The entire market rally since the April correction has been building toward this week, when the Federal Reserve is finally expected to cut interest rates, a move that would unlock cheaper borrowing costs and stimulate both consumer and business spending. The lead-up has felt almost surreal, with markets brushing aside persistent inflation and labor market softness. Yet equities have pushed to record highs on the anticipation of rate cuts, confident that looser monetary policy will not only open capital markets but also fuel an even greater wave of investment into AI.
Interest rates and earnings are ultimately what control market cycles. When The Fed raises rates, borrowing becomes more expensive for businesses and consumers. That slows investments, hiring, housing, housing, and spending. Conversely, lowering rates can spark an economic boom, especially when there’s already excitement over a specific field, in this case, artificial intelligence. There are billions on the sidelines waiting to be spent on AI infrastructure, which ultimately leads to stronger earnings, the second most important factor behind stock market performance.
The Federal Reserve will hold its meeting on Wednesday September 17th and release the rate decision at 2 PM ET. The decision will be followed by remarks from Fed Chair Jerome Powell at 2:30 PM ET. These events often increase volatility on the market so be prepared for anything. With markets already at all time highs, anything surprisingly negative can spark profit taking. As for now, the market is predicting a 93.4% chance of a 25 BPS rate cut, a high rate cut may raise red flags about the economy, and no rate cut is surely to spark a sell-off. We’ll be updating the event in real-time and notating any pivotal remarks from Powell for our Hyper Stocks Pro members.
Apart from FOMC this week, there are several reports to watch for:
- U.S. Retail Sales Report (Tue)
- Import Price Index (Tue)
- Industrial Production (Tue)
- Homebuilder Confidence Index (Tue)
- Initial Jobless Claims (Thu)
- U.S. Leading Economic Indicators (Thu)
These reports won’t hold as much weight as the FOMC this week, but they are still important to watch for investors who want to paint a full picture of the current economic situation. Some of these will give insight to which industries to trade and which to avoid in the coming weeks and months. We’ll be updating the outcomes in our morning analysis (available for Hyper Stocks Pro members).
SPY Technical Analysis:
Just when you think it can’t go higher, it once again breaks new records. It seems like retail investors are waiting on a market crash because of all the uncertainty around the economy, but markets don’t crash or even correct that often. While a pullback from these highs would be healthy and offer better entry points, outright betting against this market is risky. The reality is that major indexes like the S&P 500 remain elevated because of continuous capital rotation across sectors, with strength in one area consistently propping up the broader market. We will continue to position ourselves in the sectors receiving capital and maintaining a close eye on the broader indexes for any reasons to change strategy.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of capital. Always do your own research or consult with a licensed financial advisor before making investment decisions.