The S&P 500 broke its three-day winning streak on Tuesday, falling a bit after the Fed’s latest meeting. However, technical resistance kept the index above the key level of 3,900. Despite this, the market added 0.81% value, and closed at a new high for the year.
After a volatile August, which saw an equity market plunge of nearly 4.3%, the S&P 500 bounced back in October. As of today, it has risen 13.0% in the past month. This marks the third-best month in S&P history.
After a softer than expected CPI print on Thursday, US stocks rallied for a second day. Speculations that the Fed will slow its rate hikes have helped fuel a rally in equities.
On Wednesday, the S&P 500 closed above its 50-day moving average. It was also within reach of the key 4,160-4,175 range. These levels could be crucial to the stock’s future.
In addition, the December Consumer Price Index (CPI) showed headline inflation dropping from 7.1% to 0.1%. Core inflation, which excludes volatile items, declined. Combined with the lower Treasury yields, this lifted US stock index futures.
With the Federal Reserve scheduled to consider the consumer price index and the nonfarm payrolls report on Dec. 13, investors are eager to see the Fed’s update on how the inflation scenario is shaping up.
At the same time, a robust labor market may give the Fed the ammunition it needs to keep rates higher. However, the rate cycle may end sooner than expected.