Inflation figures will be decisive in the short term for Wall Street
The New York Stock Exchange resumed its downtrend yesterday after a few rebound sessions. The tighter-than-expected outcome of the midterm elections, the rout in the crypto market and the disappointing quarterly results of Walt Disney (-13.2%) and a number of growth stocks like Affirm Holdings (-22.6%) having pushed towards profit taking.
Market operators have digested the likely split in Congress after the mid-term elections, which should lead to legislative deadlock. This would make it nearly impossible to pass any further tax hikes or major spending plans, which was the expected outcome before the election.
The publication on Thursday of US inflation figures for the month of October is now at the center of attention. The consensus calls for a slight slowdown in inflation and core inflation, but it will remain well above what is tolerable for the Fed. That said, Wall Street could rebound if core inflation comes out in line with expectations and housing component prices slow sharply. Otherwise, Wall Street will likely react lower.
S&P 500 daily price chart – key levels