💣The candle is fading📦

The equity market made a fast comeback on Wednesday after suffering a rout due to higher-than-expected inflation figures. While it is tempting to say the sun has finally arrived, it is more likely to be a reset of expectations. In short, the market is trying to find a footing and direction. 

Next week’s FOMC meeting on Wednesday will provide the market with more clues as investors look to Uncle Powell for his take on the current inflation fight. 

💰S&P 500 is still in critical mode🕹

As we had discussed in a previous update, the index is still holding the fort line of 3900, which used to be a level that buyers came in to purchase and swing the index higher in the early month. 

We are already seeing the 2-year Treasury hitting a high of 3.78%, creeping into investors’ minds that a possible induced economic slowdown is coming. Be prepared for the cooling agent as we ride this volatile swing until next week’s FOMC meeting. 

🎯Mortgage Applications showing crack🔭

As the mortgage rate hit a 6% mark, the first time in a decade, it is like a brake on buyer demand. It affects the market in 2 ways: first, it increases the cost of home loans for buyers and existing homeowners looking to refinance their loans. 

Indeed, an index that tracks the volume of loans for home purchases remains sluggish. Hence, Pika World expects lesser discretionary income as wage growth slows and disposable income fall with saving depleting into a cool winter. 

✏️What’s on the menu today?📁

At 8.30 pm, we will receive the initial Jobless Claims, which we expect to see a stable level at 226K. 

At the same time, the Philadephia Fed Manufacturing Index is expected to moderate sharply to 2.8 from 6.2 in the prior period.