Major averages sold off again yesterday on higher volume with the S&P 500 closing below its 50-day moving average. Some hawkish commentary sparked by the higher than expected CPI, the largest increase in three years, pushed up the odds of a rate hike at the next Fed meeting. Two Federal Reserve presidents recently said at least two interest-rate increases may be needed this year.
Under the hood, the market is running on 2 cylinders but the QE fumes which remain steady attempt to push this flopping fish up the hill. The back-and-forth action with the market continuing to flirt with highs since 2015 is like a dysfunctional salmon trying to swim upstream.
Minutes from the Federal Reserve’s last policy meeting are due today at 2 pm ET. Recent members have expressed hawkish tendencies though odds of a rate hike show Fed futures at low levels. It will not be until the meeting in November that the odds increase beyond 50%.
A weekly reading on U.S. oil supplies is due at 10:30 am ET. Given the correlation between stocks and oil, this has the potential to move markets as a recent reading pushed markets temporarily higher.
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