The Federal Reserve Bank's decision expected on Wednesday will be the main event for investors this week, as Wall Street searches for clues about the health of the US economy and the possibility of lowering interest rates later this year.
➜ The latest US job market data will be released
➜ Stocks recorded a positive week until Friday's session, as the S&P 500 index ended a three-week losing streak, and the Nasdaq Composite index recorded its first positive week in five weeks. These gains come on the back of some strong earnings results from Alphabet, Microsoft, and Microsoft, the parent company of Google, among other companies, which helped offset ongoing fears of persistent inflation.
➜ Higher inflation rates are increasingly shaping the market as investors reevaluate their assumptions about what the Fed will do with interest rates.
➜ The Fed is widely expected to keep interest rates unchanged next week, but investors will analyze Powell's comments after the meeting to see if he has turned more hawkish after the latest data.
➜ Brian Nick, chief investment strategist at the Macro Institute, said of Fed Rally policymakers:
If you judge just by the public speeches we have heard since their meeting in March, they are likely to become increasingly more hawkish. They are not issuing new forecasts but you will certainly hear more caution on inflation from the Chairman.
➜ Powell's tough stance against inflation could unnerve investors who worry that higher interest rates for a longer period will create cracks in an economy that has been holding up so far.
➜Some investors will also be watching to see if the idea of raising interest rates can be brought back to the table
➜Matt Stuckey, Senior Equity Portfolio Manager at Northwestern Mutual Wealth Management, noted:
The idea of raising interest rates in the face of a still resilient economy is increasingly on the market's mind
