The 'Fed's default' is likely another 25 basis point rate hike in late March at the next FOMC Meeting. Today's Minutes of the last meeting weren't really a market mover, and were taken in-stride with nominal initial disappointment.

Freepik

So with that out of the way, you may not have the makings of a new S&P (SPX) uptrend yet, but you possibly have a good bit of a battle to hold the 200-DMA zone.

Opportunistic 'disinflation' (wringing more inflation out of the economy while it allows them to do so), is the argument for the Fed doing 'still more'. Of course they continue to ignore the backdrop of higher Food & Energy which they're not able to control due to war and climate, and not simple demand-pull issues.

So the market has to live with a 'higher trajectory' for the 'terminal rate', such as above 5.3 as has been inferred for the Funds rate. There isn't much of any moderating force in the Minutes, maybe the January strength they fear is just overstated, and seasonally normal after the holidays.. and with infrastructure spending too. It's possible some of that upward pressure will soften just a bit.

However, consumer economic activity usually 'picks up' in the Spring, and that conceivably could push them a bit higher, but again may variables prevail. Of course that might include the 'war', because expansion or contraction matters a lot for prices, for grain harvesting (25% of world grain production originates in Russia and Ukraine), for Oil (with Russia discounting Ural Oil to China) and so on. Oil matters a lot to markets and economic 'perceptions'. We think that the U.S. is making the market, selling over 80 and buying near 70, for now.

In-sum: 

Muted response to the less friendly Fed Minutes, now we move-on to a battle around or near the S&P 200 Day Moving Average (40-50 points lower but there's no assurance we'll get that low just now).

Why? Because of Nvidia's (NVDA) earnings which bolstered Semiconductors, as yet another indication that the Fed isn't the arbiter of all that happens globally. It isn't something the charts suggest, but I can see how certain stocks might be primed to move higher, especially thinking of AEHR and BBAI, but might be a prospect a few days from now depending on the overall macro battle, while it also might be that managers or traders are already gradually buying the dips.

Meanwhile the era's malaise of high inflation, foreign policy challenges (are we trying hard enough to avoid WW III?), and dubious sanction success, vs. both Russia and even Iran, what do we have to rejoice about? At least we (the U.S. and market) need to avoid another fiasco, or exogenous disaster. Of course we can, but it goes beyond helping Ukraine and coddling China.

This is not Kissinger's era, and there's no secret visit of President Xi coming to the CIA, which (check history) his predecessor actually did. At the time the USA and China had a common enemy... China. CIA set-up intelligence sites in the West of China near Russia's test sites. Joe Biden visited 'then' and met all the leaders. Great cooperation resulted. It was Operation Chestnut. For now it's reversed, and China and Russia are overly chummy, but we and EU markets determine China's economic survival. So there's a lot at stake now.

Bottom-line: 

it seems traders know to respect the Fed's (hostility?) hawkish or restrictive view, but also that we're nearing exhaustion of February's retreat as the month progresses, but may not be quite there as of yet.

Technicals still point to a bit more active fight around the 200-Day, but that too is a bit below where the S&P is now. Most money managers may not say so it seems, but they are not looking to 'play' the downside, but rather finessing the point or timing of entering, because most missed the entire January run-up.

It may not be that something like Semiconductors turning up will be sufficient to impact the broader market, but they will notice that. It remains a mix of tech and geopolitics, with a war thrown in too. 

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