🥃Old worries into 2023🔦

The equity market reversed early gains and closed in the red as the persistent worries of inflation and rate hikes haunted the market. Recession fear is mounting, and one can expect big moves for the week when critical economic data is announced. 

📊Manufacturing PMI data signal contraction, but firm🎯

While the Manufacturing PMI data reflect contraction, it is still within expectation and thus shows the economy is still threading well. Nevertheless, it is a dizzy market as indices tried to go green but turned sour in the trading session. Policy responses to the aftereffects of Covid -19 remain a deep concern for traders. 

Moreover, IMF is still predicting that part of the global economy will enter into a recession, prompting fear that the Fed may have over-tightened. After all, a delicate balance is almost impossible. 

💣S&P 500 is in a dangerous zone🎲

We should see tremendous support above the 3700 level. While plenty of bad news had baked into the market, it is a partial set. Buyers were significantly seen at a crucial level when S&P 500 dipped to the 3800 level. Nonetheless, on Tuesday, we are hovering on that level. Hence, it is possible to tilt to the downside risk.

Some bright sparks helped support the market. For one, the dip in bond yields had provided a cushion on declining equity prices but whether that can last is still to be seen. 

📮What are the dishes for the day?📖

At 11 pm, we will welcome the ISM Manufacturing data. We expect it to drop to 42.6 from 43.0, further evidence of a weakening economy. 

Most importantly, at the same time,  the JOLTs Job Openings are expected to decline to 10M from 10.334M. A fall will help the market since the Fed is determined to see the job market losing some steam. 

Next, at 3 am, we will have the FOMC minutes released. We are keen to know two things, whether the Fed is discussing intensively to moderate rate hikes and the possible path ahead.