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09.11.2022 03:04 PM
Inflation in the US will determine the future direction of the stock market

While the US stock market is ready for a new wave of decline caused by the Republican Party's not-as-confident leadership, as investors would like, many traders already prefer to take profits before the most important report on the consumer price index. It will be released tomorrow, which will be the next risk for the Fed and its monetary policy. Even if prices start to decline, the consumer price index will remain well above the central bank's target level, which is unlikely to significantly affect the next few decisions of the committee on interest rates.

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As Jerome Powell has repeatedly said: the main task of the Fed is to fight inflation, and it does not matter which way the goals will be achieved. Powell said at the last meeting that we would continue to raise interest rates as high as necessary. It is clear to everyone that the market will continue to fixate on inflation, which will remain high and stable for the next few quarters. Also, no one doubts that in December and early next year, the Federal Reserve System will continue to raise rates – the only question is how aggressive the policy changes will be.

Premarket:

According to SEC documents, CEO Elon Musk sold nearly $4 billion worth of Tesla stock within days of buying Twitter. On this news, Tesla shares gained 1.5% in the premarket.

Shares of Facebook's parent company rose 4.3% in premarket trading after the company announced it was laying off 13% of its workforce, or more than 11,000 people. Previously, there were rumors about almost 30%.

Walt Disney securities fell by 7.4% in the premarket due to a weak corporate report that did not meet economists' expectations. Disney's profits have suffered due to higher costs for the Disney+ streaming service, which is why the company plans to reduce marketing and content budgets.

Upstart shares plunged 23.8% on premarket trading after the credit platform based on artificial intelligence published a much weaker-than-expected revenue forecast for the third quarter, citing difficult economic conditions.

AMC reported a quarterly loss of 22 cents per share, which is less than the 26 cents predicted by analysts. Revenue exceeded the consensus forecast. CEO Adam Aron said box office receipts impacted the results in the second half of the quarter. AMC shares fell 3.9% in premarket trading.

Lucid securities fell by 8.3% in the premarket after the company said it could raise $ 1.5 billion by selling shares to finance its activities.

As for the technical picture of the S&P500, after yesterday's upward pullback, prices have failed. The main task for buyers now is to protect the support of $3,808. As long as trading is conducted above this level, we can expect a return in demand for risky assets – especially in the absence of important statistics on the United States. This will create good prerequisites for strengthening the trading instrument and returning $3,835 under control, just above which the level of $3,861 is located. A breakthrough in this area will strengthen the hope for an upward correction with an exit to the resistance of $3,905. The farthest target will be the $3,942 area. In the case of a downward movement, buyers are obliged to declare themselves in the area of $3,808 and $3,773. A breakdown of this range will quickly push the trading instrument to $3,735 and $3,699 and open up the possibility of updating the support of $3,661.

Jakub Novak,
Analytical expert of InstaForex
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