The S&P 500 index remains under pressure ahead of the Federal Open Market Committee decision later in the trading day. Costco and Carnival investors prepare for the quarterly earnings to be released later in the trading week.
Financial markets prepare for what may be the most important economic event for the rest of the year – the FOMC Statement, Press Conference, and Economic Projections. The S&P 500 index is well off its recent highs, as the U.S. equity markets reacted to the Evergrande saga developing in China. The possible bankruptcy of one of the largest Chinese property developers may have spillovers into the international financial markets.
As such, the main index is down for the week. Nevertheless, the S&P 500 futures point to a positive opening, up more than 0.5% when this article is written and ahead of the Fed’s decision.
European indices opened in the green today, taking their leads from the U.S. futures. The German index is up 0.6%, and trades above 15,400 points, the CAC 40 in France is up over 1%, while the U.K.’s FTSE 100 index regained the 7,000 level.
Gold and oil are up today, 0.25%, respectively 2.05%. The bullish bias for the price of oil persists as long as it trades above $70.
Economic Events to Consider Today
The Bank of Japan’s monetary policy decision turned out to be a non-event, meaning that no changes in the policy were announced. As such, attention turns to the Federal Reserve of the United States. Investors will concentrate on the economic projections and especially on the path of future rate hikes.
Today’s Markets to Watch
Today’s markets to watch are S&P 500, Costco, and Carnival.
S&P 500 Outlook
The S&P 500 outlook remains bullish despite the price action falling out of a possible rising wedge pattern. A rising wedge is a reversal pattern and the market typically retraces at least 50% of its length. However, before doing so, it needs to break the previous support. In the case of the S&P 500 index, previous support is seen at 4,200. In the bullish scenario, a daily close above 4,500 invalidates the rising wedge pattern.
Costco formed a head and shoulders pattern ahead of the quarterly results. The company releases its Q4 2021 earnings tomorrow at 02:00 PM PDT and investors expect EPS of $3.54 on the quarter. From a technical analysis perspective, Costco stock price remains bullish while it holds above $440 and a daily close above $470 would invalidate the head and shoulders pattern.
On Friday, Carnival releases its quarterly earnings, too. The stock price has met dynamic support at the lower edge of a rising channel but has failed to bounce so far. A daily close below $20 suggests more weakness as projected by the measured move of a bearish flag pattern.
Winners and Losers
Oil trades with a bullish tone, while equities are still sold on any bounce.