US stock market investors glued to these three key events in November | The Financial Express

US stock market investors glued to these three key events in November

Markets are speculating that the U.S. Fed could ease on aggressive language on future rate hikes in 2023.

US stock market investors glued to these three key events in November
The recent aggressive rate hikes have weighed on the U.S. economy and possibly lead to a recession.

November 2022 may turn out to be an important turning point for stock market investors. The first major event happens on November 2 when the US Fed announces the rate hike. Next, is the mid-term elections in the US, and thirdly, the US CPI data that gets announced on November 10 by the Bureau of Labor Statistics.

All these three events and developments are likely to keep the stock market volatility and the investors at tenterhooks. As far as the rate hiking is concerned, the US Fed is expected to deliver the fourth consecutive rate hike of 75 basis points on November 2 taking the total rate hike to 375 basis points in 2022 so far.

November, most likely, will be the last month when the 75 bps rate hike that began in June, will see an end. In December, the US Fed is expected to go for a 50 basis points rate hike. In March and in May, the Fed had hiked rates by 25 bps and 50 bps respectively.

The next set of US CPI data for October gets announced on November 10. The US Fed has a mission ahead of it, and the fight to control inflation is still ongoing. The headline inflation is expected to witness a decline, however, it is the core inflation numbers that the market will be looking for. Between May and August, US inflation fluctuated as follows: US inflation increased from 8.6% in May to 9.1% in June before dropping to 8.5% in July, 8.3% in August 2022, and finally 8.2% in September.

Also Read: Dow 30 posts double-digit percent gains, beats S&P 500 and Nasdaq 100 in October

Lastly, the stock market may witness volatility due to the upcoming mid-term elections in the US. According to Jeff Hirsch, editor of the Stock Trader’s Almanac & Almanac Investor Newsletter, “S&P 500 Midterm Election Year Seasonal Pattern Since 1946” does not paint a rosy picture for 2022.

Also Read: US Stock: Market to remain focussed on Fed’s November rate hike

Kevin Matras, Executive Vice President of Zacks mentions in his newsletter that there’s a theory developed by Yale Hirsch of the Stock Trader’s Almanac, suggesting that in the first two years after an election, the second year tends to be the weakest. In fact, it’s the weakest of all four years.

Meanwhile, the dollar strength is seen to be weakening. Prior to the Fed’s policy announcement, where a 75 basis point rate hike is anticipated, a sell-off in the global currency was observed. The market is anticipating a change in direction from the Fed on the policy front, while underlying macro data in the US remained positive.

“Recently, data in the U.S. has remained mixed. GDP was upbeat m-o-m, however, non-farm payrolls were weaker. Additionally, business confidence, services, and manufacturing PMI numbers were also weak. But the crucial inflation remained sticky with CPI on a yearly basis remaining above 8%. So, markets are speculating that the U.S. Fed could ease on aggressive language on future rate hikes in 2023 as the recent aggressive rate hikes have weighed on the U.S. economy and possibly lead to a recession,” says Sriram Iyer – Senior Research Analyst – Commodities & Currencies at Reliance Securities..

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First published on: 02-11-2022 at 08:45:00 am
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