Daily Alert – Wednesday 25th May 2022: Can the FOMC lift equities tonight?

Mark NugentDaily Alert, May 2022

Daily Alert – Wednesday 25th May 2022: Can the FOMC lift equities tonight?

Good morning.

Yesterday was quiet on the markets. Equities were mixed but moves were small. The S&P500 is notable in that, so far, we see an “up” candle on the weekly chart which, if carried through to the weekend, will break a seven-week losing streak. The “bear market” line, which is defined as a 20 percent drop from the last all-time high, is acting as support. I am looking at tonight’s FOMC Meeting Minutes as a potential catalyst for risk-on sentiment. So, from an equities point-of-view, any perceived dovishness from the FOMC should propel pricing upwards.

It is worth noting that the Nasdaq is 29 percent off its high due to the high weighting in the index of growth stocks which are more sensitive to a rising interest rate environment. We don’t see such clear-cut support on the Nasdaq as we do on the S&P500, but the scope for a reversal on the Nasdaq is the greatest of all three US indices.

So, I will watch the Fed’s FOMC Meeting Minutes closely tonight.

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