Economic Announcements:

• 1:30 PM: Unemployment
• 1:30 PM : Manufacturing Index Philadelphia Fed
• 3:00 PM : New Home Sales

(Learn more)

Earnings Reports:

• Accenture (ACN)
• FedEx (FDX)
• Darden Restaurants (DRI)

(Learn more)

S&P 500 Analysis:

VPOC: 6677.50
VVA: 6672-6742.50
High-Low: 6654.50-6814
PP: 6710
Open: 6663.75 (Zone 2)
VIX: 25.69

SP500 Trend: Overall neutral sentiment 🟠

Yesterday, the S&P 500 opened in the 6771-6777 support zone, just above the VVAL-1 that price tried to break. Buyers defended the level and pushed price up into the 6798-6808 resistance zone.

Around 12:20 PM, price sold off following Iranian attacks on petrochemical sites, which drove oil prices higher. Price fell to the 6722-6733 support zone and the 6750-6753 resistance zone just before the US open.

At the US open, price stabilized on the 6722-6733 support while awaiting Jerome Powell’s speech at 7:30 PM. After the speech and Powell’s very cautious tone, price resumed its decline, dropping to the 6665-6650 support.

This morning, the US index opens in Zone 2, below yesterday’s value area, which it has already re-entered. The market is digesting yesterday’s drop and is awaiting this afternoon’s unemployment data.

Price is currently consolidating above the 6650-6665 support zone, around the VWAP. In options, we can see strong put interest at 6600, which could set the day’s floor, and a call zone at 6800, thus defining the session’s boundaries.

The VIX index, which had eased slightly, has moved back above 25 following the FOMC press conference. Caution in the face of volatility.

Today, we will therefore have the unemployment data and the Philadelphia Fed manufacturing index at 1:30 PM, then new home sales at 3:00 PM.

Scenario 1 🟡: On a rejection at the 6650-6665 support, price could consolidate between this area and the 6702-6706 resistance zone.

Scenario 2 🟢: On a breakout above the 6702-6706 resistance zone, price could move higher and target the 6722-6733 area, then the VVAH-1, and then the 6771-6777 zone.

Scenario 3 🔴: On a break below yesterday’s VVAL and the 6650-6665 support zone, price could extend its decline and target the 6600-6610 support zone.

Zones of Interest:

• 6814 (Yesterday’s high)
• 6798-6808 (Resistance zone)
• 6771-6777 (Resistance zone)
• 6722-6733 (Resistance zone)
• 6650-6665 (Support zone + Yesterday’s low 6654)
• 6600-6610 (Support zone)

Market Situation & US Close

• The Fed strikes hard: US markets reacted sharply last night following the Fed’s decision and Jerome Powell’s speech. The S&P 500 saw a steep late-session pullback, erasing early-week gains, weighed down by the prospect of rates remaining elevated for an extended period.
• Sectors under pressure: Technology and real estate stocks, particularly sensitive to interest rates, were hit the hardest.

Today’s catalyst: Post-Fed digestion

• Stagflation in sight: The Fed holding rates, justified by a resilient economy but still-threatening inflation (notably due to oil), reinforces fears of a stagflation scenario.
• Today, the market is looking for direction: The session will be dominated by the digestion of this speech. Traders will have to reassess their valuation models with rates that likely will not fall before year-end.

Oil & Geopolitics

• Heightened maritime tensions: A commercial vessel was struck off the coast of the United Arab Emirates, underscoring growing insecurity near the Strait of Hormuz.
• US response: The US administration is considering deploying thousands of additional troops to secure maritime routes and protect oil hubs, keeping strong upward pressure on barrel prices (WTI and Brent).

Macroeconomics & US Fundamentals

• US employment to watch :Markets will begin to scrutinize upcoming jobless claims to see whether the labor market is finally starting to give way under the weight of higher rates.

Forex (EUR/USD)

• The dollar regained strength last night thanks to Jerome Powell’s hawkish speech. The EUR/USD pair could face downside pressure today, especially if the ECB (which announces its rates today) proves less aggressive than the Fed.

The Inflation (PPI) / Fed Decision pairing

The specter of rising prices resurfaces just ahead of the Fed: Producer Price Index (Monthly) (Feb.):

Actual: 0.7%
Forecast: 0.3%
Previous: 0.5%

-> This is a very unpleasant surprise for those hoping for a decline in inflation. PPI literally blows past forecasts and accelerates versus the prior month. This means companies are paying much more to produce.

Summary

• Inflation is proving stubborn: This figure destroys the idea that the fight against inflation has been won.
• Impact for the FED: Unsurprisingly, faced with such persistent inflation, the Fed took no risk at 7:00 PM: it kept rates locked at 3.75%. The PPI report gives the Fed every reason to remain strict and to push back rate cuts.
• Market action: This combo (hot inflation + a cautious Fed) is the perfect fuel to strengthen the dollar and put heavy pressure on equities. Gold also tends to fall on this type of announcement.

The shock to black gold (oil)

Oil: Tanks are overflowing, the market caught off guard
Crude oil inventories:

Actual: 6.156M
Forecast: -1.500M
Previous: 3.824M

-> Analysts expected the United States to draw down its reserves, suggesting solid demand. Instead, inventories swelled by more than 6 million barrels. We are left with far more oil than expected.

Summary

A sign of weakness: Such an inventory build generally means one of two things: either the economy is slowing and consuming less energy, or production is far too strong relative to demand.