Stocks slumped Friday after U.S. data showed a decline in consumer sentiment combined with expectations for higher inflation. The University of Michigan's index of consumer sentiment in May sank to a six-month low while its five-year outlook for inflation spiked to its highest reading in more than a decade. Market participants also were keeping a close eye on proceedings surrounding the debt ceiling, with the potential for a default as soon as early June edging closer. Financial stocks fell as concerns over regional banks continued to simmer.
Chart: SPY 15 mins for week
For the week, the leading stock market averages turned in a mixed performance and range play. At one side, the market is expecting that the economy data will force the FED to decrease the interest rate, and on the other side, the market also fears about the recession, and to be honest, SPY at 410 is not cheap at all. Therefore, we can clear see that the market was struggling around 408-415ish for last week.
The ticking bomb of a potential default by the U.S. government will be front and center with investors again next week. Treasury Secretary Janet Yellen will meet with JPMorgan Chase (
JPM
) CEO Jamie Dimon, Citigroup (
C
) CEO Jane Fraser and other board members of the Bank Policy Institute in Washington to discuss the debt limit talks. Dimon has already warned that markets will be gripped by panic as the U.S. approaches a possible default on its sovereign debt. And on the same theme, the standoff could be even worse for markets than anticipated.
Chart: SPY daily
Although we have passed the peak of inflation and are experiencing disinflation, the momentum of the decline is losing steam. As a result, the Fed has a justification for pausing its hikes, as investors had already predicted due to the ongoing economic weakness. However, under these circumstances, I feel the SPY will face more selling pressure upfront. 200 EMA will be a more critical place, compare where we are at right now.
For the week, the leading stock market averages turned in a mixed performance and range play. At one side, the market is expecting that the economy data will force the FED to decrease the interest rate, and on the other side, the market also fears about the recession, and to be honest, SPY at 410 is not cheap at all. Therefore, we can clear see that the market was struggling around 408-415ish for last week.
The ticking bomb of a potential default by the U.S. government will be front and center with investors again next week. Treasury Secretary Janet Yellen will meet with JPMorgan Chase (
JPM
) CEO Jamie Dimon, Citigroup (
C
) CEO Jane Fraser and other board members of the Bank Policy Institute in Washington to discuss the debt limit talks. Dimon has already warned that markets will be gripped by panic as the U.S. approaches a possible default on its sovereign debt. And on the same theme, the standoff could be even worse for markets than anticipated.
Although we have passed the peak of inflation and are experiencing disinflation, the momentum of the decline is losing steam. As a result, the Fed has a justification for pausing its hikes, as investors had already predicted due to the ongoing economic weakness. However, under these circumstances, I feel the SPY will face more selling pressure upfront. 200 EMA will be a more critical place, compare where we are at right now.
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