On Wednesday, the tech-heavy Nasdaq 100 index traded 3% higher as investors hoped for a diplomatic solution between Russia and Ukraine while bracing for volatile trading after today’s FOMC decision.
Stagflationary data released today
On the macro data front, US retail sales came out weaker than expected, printing just 0.3% monthly for February, down from 4.9% previously. At the same time, the control group, used in GDP calculations, cratered to -1.2% from 6.7% in January. Finally, the ex-autos gauge decelerated from 4.4% to 0.2%.
“Consumer sentiment may be wilting, and inflation is absolutely chipping away at purchasing power, but today’s retail sales report will likely result in some upward revisions to first-quarter consumer spending growth,” analysts at Wells Fargo said after the release.
Additionally, the US export price index, which informs of the changes in the price of US export goods and services, rose to 16.6% yearly in February, up from 15.1% in January. The import price index, which informs of the changes in the price of imported products into the US, jumped further from 10.7% to 10.9%.
All eyes on Fed
Later today, the Federal Reserve will deliver its first rate hike since 2019 as inflation accelerates across the country. Traders will pay attention to new sets of economic projections, while the Fed could sound somewhat hawkish, despite the ongoing conflict in Ukraine.
“We anticipate the Fed will hike less aggressively than markets are currently pricing given the growth concerns, but the persistence and breadth of hotter inflation may result in a more extended hiking cycle than was originally penciled in.” JPMorgan wrote in a note ahead of the meeting.
As far as the Russia-Ukraine conflict is concerned, Ukrainian president Volodymyr Zelensky confirmed in a late-night address on Wednesday that meetings between officials from both sides were ongoing, adding that “the positions at negotiations are more realistic now.”
Technically speaking, the index is testing previous swing highs in the 13,850 USD area. If bulls push the price above it, stop losses of short positions could be hit, likely sending the index further higher, potentially targeting the 14,330 USD zone.
Alternatively, the support seems to be at 13,600 USD, followed by the next buying zone near 13,400 USD.