S&P 500 Test February Lows on Fed Rate Hike News

S&P 500 Test February Lows on Fed Rate Hike News

$DIA, $SPY, $QQQ, $RUTX, $VXX

  • S&P 500 retests its February low at 2532.69 for the 3rd session running

US stocks declined Wednesday after the Fed’s dovish forecast of fewer interest-rate increases in Y 2019 fell short of investors’ hopes of a more dovish monetary policy.

The DJIA fell as much as 500 pts at 1 point, erasing a 380 point gainer and heading for a new closing low for Y 2018.

The Federal Open Market Committee (FOMC) said in a statement following a 2-day policy meeting that risks to the economy were “roughly balanced,” but it would “continue to monitor global economic and financial developments and assess their implications for the economic outlook.”

Investors said Fed Chairman Jerome Powell’s remarks in a news conference following the committee’s statement that he did not see the central bank changing its policy of keeping its balance sheet run-off on “autopilot” raised concerns of tightening financial conditions placing further strain on financial markets.

In terms of the FOMC decision, the target range for the fed funds rate was increased by 25 bpts to 2.25% to 2.50%, as expected, and the dot-plot was revised to show a median projection for 2 rate hikes in Y 2019, Vs 3 prior.  That was not a surprise, but appeared hawkish relative to the Zero rate hikes currently expected by the fed funds futures market.

Chairman Powell was consistent in his commentary Wednesday that he does not see any tightening that stems from the unwinding of the balance sheet. The Fed is unwinding $50-B monthly and soaking up liquidity from the markets.

The market message is we are seeing tighter financial conditions and a weaker path for growth.

Wednesday, the US major stock market indexes finished at: DJIA -351.98 at 23323.66, NAS Comp -147.08 at 6636.83, S&P 500 -39.20 at 2506.96

Volume: Trade on the NYSE came in at 1.3-B/shares exchanged

  • NAS Comp -3.9% YTD
  • DJIA -5.7% YTD
  • S&P 500 -6.3% YTD
  • Russell 2000 -12.3% YTD

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bearish.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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