The equity market faced headwinds from the Fed’s speeches and corporate earnings.

Equity markets had a tough day, with the Nasdaq showing more resilience than other indices, which fell broadly throughout the session. S&P 500 continued to fail to break new highs and trend lower for the whole trading session as investors digested the latest economic news, corporate earnings and Fed’s speeches before the blackout period next week.

Let’s dive into the details.

🎙Fed’s Wallers is pleased with the current state of the economy where inflation is cooling, the labour market remains healthy, and the economy is still firmly intact. He acknowledged the prospects for the central bank to lower interest rates this year but is concerned about the potential of inflation resurfacing.

He believed the current monetary policy is restrictive enough to bring inflation back to the Fed’s 2% target. Still, he cautioned against the bet on early rate cuts, contrary to investors’ expectation for a March cut.

🎯Morgan Stanley reported earnings which saw a weaker-than-expected profit margin in its wealth management business. This casts doubt on whether it can hit the desired level in future. The earnings per share of 85 cents is sharply lower than analysts’ estimate of $1.07. We also saw the net income fall from $2.2 billion to $1.5 billion.

All eyes will be on its wealth management pretax margin for the next quarter as investors pare back the price target for the bank.

🥁In contrast with Morgan Stanley, Goldman Sachs had a better day as its wealth management business had jumped 23% compared to the prior year. The earnings of $5.48 per share smashed Wall Street’s estimate of $3.62 per share.

With a decline in mergers and acquisitions volume globally, the business segment for global banking and markets fell by 3%. The poorer outlook for M&A activity is primarily driven by the high-interest rate, a persistent inflationary environment and geopolitical uncertainty that hinders business outlook. Still, its CEO is optimistic about capital market activity and project improvement.

📪What’s on the menu today? 🖨

High on the list will be the retail sales figure. We are looking at a core retail sales growth of 0.2% on a monthly basis, unchanged from the prior level. This will help to shore up confidence in consumer spending, health, and the economy.

FOMC member Bowman will be speaking at 10 pm, too.

At 10.15 pm, a string of industrial production data will be released, which we should expect weaker figures, in line with recent economic data suggesting a slowing economy.

It is 17 Jan, Wednesday, 9.05 am in Singapore and 9.05 pm in New York. The market is still showing choppiness and weakness. We expect a massive move in the market by at least 50 points for the S&P 500 in either direction.

We hope you have a splendid day ahead.