Is the market poised for a shake-up? With the Fed's crucial interest rate decision looming, all eyes are on whether today could mark a turning point for the S&P 500.
Will the Fed announcement lead to movement in the stock market?
Stock prices pulled back from Monday’s highs yesterday, with the S&P 500 closing 1.07% lower, nearing the 5,600 level again. Today, the market is awaiting the key FOMC interest rate decision at 2:00 p.m. and the FOMC press conference at 2:30 p.m., which is likely to increase volatility. Overall, stocks may continue their consolidation following recent declines.
The S&P 500 is expected to open 0.2% higher today, moving sideways after yesterday’s pullback. Has the downtrend reversed? Likely not, but the market may see a correction after recent declines.
Investor sentiment remained bearish last week, as shown in last Wednesday’s AAII Investor Sentiment Survey, which reported that only 19.1% of individual investors are bullish, while 59.2% of them are bearish.
The S&P 500 trades in consolidation, as we can see on the daily chart.
Nasdaq 100: Below 20,000 Again
The Nasdaq 100 lost 1.66% on Tuesday, retracing some of Monday’s 2.5% rebound. It remains in a short-term consolidation following last Tuesday’s sell-off. The key resistance level remains around 20,000, marked by previous support.
VIX Rebounds from Around 20
The VIX index, a measure of market volatility, continued pulling back this week, reaching a low of 20.32 on Monday. Yesterday, it rebounded from that level, signaling increased market fear as stocks sold off.
Historically, a dropping VIX indicates less fear in the market, and a rising VIX accompanies stock market downturns. However, the lower the VIX, the higher the probability of the market’s downward reversal. Conversely, the higher the VIX, the higher the probability of the market’s upward reversal.
S&P 500 Futures Contract: Below 5,700
This morning, the S&P 500 futures contract (June series) is trading below 5,700 after pulling back from Monday’s daily high of around 5,760. Currently, resistance is at 5,700–5,720, while support is at 5,650.
Conclusion
The S&P 500 is expected to open slightly higher on Wednesday as investors await the FOMC interest rate decision.
The market has sold off sharply in recent weeks, and it may now consolidate or attempt a more meaningful upward correction.
Given rising geopolitical uncertainty and worsening investor sentiment, no clear positive signals are evident. It seems the bull market may be due for a longer pause.
Quoting my Stock Price Forecast for March 2025 “the stock market is poised for a positive start to the month, though this may simply be another part of its medium-term consolidation. The S&P 500 keeps fluctuating following its post-election rally.”
For now, my short-term outlook is neutral.
Here’s the breakdown:
- The S&P 500 continues to fluctuate after recent declines.
- Investors are awaiting the Fed’s announcement today.
- In my opinion, the short-term outlook is neutral.
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Thank you.
Paul Rejczak,
Stock Trading Strategist