If the central American bank’s outlook on the state of the economy is at least a little more optimistic than the last, stock prices on Wall Street could rise this week.
Last week, the Dow Jones index strengthened by 1.4 percent, to 10,607 points, while the S&P 500 rose by 1.5 percent, to 1,125 points, and the Nasdaq index by 3.3 percent, to 2,315 points. On Friday, the S&P 500 index managed to break above the technically important resistance level of 1,130 points at one point, but could not hold above it. Holding above that level, with significant trading volume, would be a positive signal for further market movement, considering that the S&P has not managed to break above 1,130 points in the last four months. However, judging by options trading, some traders consider that level to be the current ‘ceiling’, so they have hedged their portfolios against falling stock prices.
Others, however, believe that the regular meeting of Fed leaders on Tuesday could be a turning point after which stock prices could rise more convincingly. “By Tuesday, I expect more enthusiasm in the market, and the Fed meeting could be the catalyst that pushes the S&P index above the 1,130-point threshold,” says Brian Jacobsen, a strategist at Wells Fargo Funds Management. At the end of August, Fed Chairman Ben Bernanke stated that there should be a significant weakening of economic conditions for the central bank to further loosen monetary policy. Given that the latest macroeconomic data is mostly better than expected, the Fed could postpone the introduction of new measures to stimulate economic growth. Most analysts believe that the Fed will not change anything in monetary policy, but there are differing opinions.
