January 27, 2022

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US Close: Tech gets crushed again, Fed ready to hike in March, PPI cools, Earnings on deck

Big Tech stocks are selling off so dramatically as a product of, ‘yes US rates are likely to go up further this year,’ but also as investors rotate into value and cyclical trades.  A recent chorus of Fed speakers that have said they are open to raising interest rates in March, which means the possibility of 4 rate hikes this year is growing. Wall Street is trying to get a sense of how much growth is going to slow and the banks will start providing some insight on Friday.

Harker’s stance on inflation is that it is very high and very bad.  Fed’s Brainard testified before the Senate and said the Fed is very focused on policy moves to quell inflation.  With four FOMC voters now expecting to hike in March, financial markets can’t rule out it is possible that they could deliver five rate hikes this year.

Earnings on deck

Earnings season starts with the big banks and Wall Street expects some strong results.  Investment banking should have strong M&A activity and everyone knows how well the IPO/SPAC markets performed.  Loan activity is expected to moderate for JPMorgan, while edging higher for Bank of America and Citigroup.

Overall optimism is strong for corporate America to navigate through the omicron wave and remain upbeat about the second half of the year.

PPI

Price increases that suppliers charge customers moderated in December.  The December producer price index rose 0.2% in December lower than the 0.4% estimate and a decline of the 0.8% increase seen in November.  With China’s prices that suppliers charge also coming down, that could support the further cooling of pricing pressures in the US in the coming months.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.

Ed Moya

Ed Moya

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