U.S. Stocks May Lack Direction Following Post-Fed Volatility

U.S. Stocks May Lack Direction Following Post-Fed Volatility

September 29, 2022

After seeing substantial volatility late in the previous session, stocks may continue to show a lack of direction in early trading on Thursday. The major index futures are currently pointing to a roughly flat open for the markets, with the S&P 500 futures unchanged.

Traders may be reluctant to make significant moves amid uncertainty about the near-term outlook for the markets following the Federal Reserve’s third straight 75 basis point interest rate hike.

While the Fed’s economic projections provided a clearer outlook for future rate hikes, traders remain concerned about the impact the aggressive rate increases will have on the economy.

The next Fed meeting is over a month away, giving traders a lot of time to analyze incoming economic data and try to determine the effect of the recent string of rate hikes.

Reports on inflation and the labor market are likely to be in focus in the coming weeks, as traders look for signs the Fed could alter the aggressive plan that has been laid out.

The Labor Department released a report this morning showing an uptick in jobless claims in the week ended September 17th.

The report showed initial jobless claims inched up to 213,000, an increase of 5,000 from the previous week’s revised level of 208,000.

Economists had expected jobless claims to edge up to 218,000 from the 213,000 originally reported for the previous week.

The modest increase came after jobless claims dropped to their lowest level since the week ended May 28th in the previous week.

Not long after the start of trading, the Conference Board is scheduled to release its report on leading economic indicators in the month of August. The leading economic index is expected to come in unchanged in August after falling by 0.4 percent in July.

Stocks typically see wild swings following the Federal Reserve’s monetary policy announcements but saw particularly significant volatility on the heels of the central bank’s latest decision on Wednesday.

The major averages swung back and forth across the unchanged line before finishing the day just off their lows of the session.

The Dow slumped 522.45 points or 1.7 percent to 30,183.78, the Nasdaq plunged 204.86 points or 1.8 percent to 11,220.19 and the S&P 500 tumbled 66.00 points or 1.7 percent to 3,789.93.

With the sharply lower close, the Dow fell to a three-month closing low, while the Nasdaq and the S&P 500 dropped to their lowest closing levels in well over two months.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index fell by 0.6 percent, while China’s Shanghai Composite Index dipped by 0.3 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index has edged down by 0.2 percent, the German DAX Index and the French CAC 40 Index are both down by 0.6 percent.

In commodities trading, crude oil futures are jumping $1.33 to $84.27 a barrel after sliding $1 to $82.94 a barrel a barrel on Wednesday. Meanwhile, after rising $4.60 to $1,675.70 an ounce in the previous session, gold futures are climbing $7.80 to $1,683.50 an ounce.

On the currency front, the U.S. dollar is trading at 140.88 yen versus the 144.06 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $0.9874 compared to yesterday’s $0.9837.

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