The S&P 500 Drifts Lower With Investors Focused On Fed's Upcoming Actions

The S&P 500 (Index: SPX) mostly drifted sideways to lower during the third trading week of November 2022. That's mainly because nothing happened to change the time horizon of investors, who maintained their forward-looking focus on the current quarter of 2022-Q4.

At least, that's how we're reading the latest update to the alternative futures chart.

Alternative Futures - S&P 500 - 2022Q4 - Standard Model (m=+2.0 from 13 September 2022) - Snapshot on 18 Nov 2022

We think the drifting lower part of the S&P 500's movement is related to dissipating noise from the previous week. Otherwise, the news of the week indicates what the Fed will be doing with interest rates, and more importantly, what they say they're going to be doing with interest rates in 2023 at its upcoming December 2022 meetings is holding investor attention on 2022-Q4.

Here are the market moving headlines from the trading week ending on Friday, 18 November 2022.

Monday, 14 November 2022

Tuesday, 15 November 2022

Wednesday, 16 November 2022

Thursday, 17 November 2022

Friday, 18 November 2022

The CME Group's FedWatch Tool continues to project a half point rate hike on tap for 14 December (2022-Q4). But in 2023-Q1, the FedWatch tool now projects a half point rate hike in February and a quarter point rate hike in March (2023-Q1), with the Federal Funds Rate reaching a peak target range of 5.00-5.25%. Looking further forward, the FedWatch tool still anticipates two quarter point rate cuts in 2023-Q4 (November and December) as the Fed is forced to go into reverse after developing recessionary conditions take hold in the U.S. economy.

The Atlanta Fed's GDPNow tool's projection for real GDP growth in 2022-Q4 rose to +4.2% from last week's +4.0% estimate. There continues to be a big gap between its forecast and the so-called "Blue Chip consensus" that continues to predict near zero growth in 2022-Q4.

With the Thanksgiving holiday later this week, we're not expecting much to happen with stock prices. As such, we're switching the rest of our week's analysis over to resume our annual Thanksgiving celebration, where we'll pick up with the next regular edition of the S&P 500 chaos series on Monday, 28 November 2022.

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