The U.S. stock rally, spurred on by the Federal Reserve's pivot, lasted only one day. The day after the Fed meeting, the ** rally faded, and the three major U.S. stock indexes all turned lower intraday.
The Dow, which rose nearly 200 points when it hit a record high on Thursday, turned down and fell nearly 40 points when it refreshed its daily low. It rose nearly 0The 7% S&P turned lower and fell as much as 03%, up more than 08% of the Nasdaq fell more than 06%。
Although the three major indexes have since turned higher, such performance has made people question whether the market is running too fast and rising too much.
Some commentators pointed out that after rising more than 1% on Wednesday, the S&P 500 is close to its all-time high, and its valuation and technical aspects have entered overbought levels, suggesting that U.S. stocks will be vulnerable in the face of **. And super blue-chip tech stocks are under pressure.
As you can see in the chart below, the S&P is approaching its worst overbought level in more than a decade.
After Wednesday**, 47% of S&P 500 constituents were overbought, the highest percentage since February 1991.
Wall Street has noticed that the Nasdaq 100, which has risen more than 50% since the beginning of the year, failed to return to the rally after turning lower intraday on Thursday. On Wednesday, the Federal Reserve released the interest rate cut signal on the same day, including Apple, Microsoft, Alphabet, Meta, Nvidia, Tesla, Amazon, including the seven major technology stocks overall rose limited, and did not join the ** "carnival" camp, Thursday intraday, in addition to Tesla, the other six ** all turned down, becoming the main driver of the three major stock indexes intraday decline.
At the same time, Wall Street has noticed that some ** pointed out that investors' current pricing reflects that they expect that next year, the Fed will have a total of six 25 basis point rate cuts, that is, 150 basis points, and the expected decline on Thursday even reached 160 basis points. Goldman Sachs adjusted its expectations after the Fed meeting, expecting the Fed to cut interest rates earlier and more sharply next year, with a total of 125 basis points of cuts and five rate cuts. The Fed's latest interest rate path expectations released on Wednesday showed that most Feds** expect to cut interest rates by 75 basis points next year, or three rate cuts. Callie Cox, an investment analyst at eToro, commented, "We're a little nervous about the coming weeks. **Needs to be reviewed carefully. We haven't seen a 1% gain in the S&P 500 since the end of October. Bets on the Fed to cut interest rates have been strong, but don't be surprised if we see it cool. It shouldn't change your perception of what is good for our environment. ”
There are also comments that while Wall Street traders are all-in betting on the Fed's big pivot next year, there is no guarantee that the market's euphoria will continue. Over the past two years, the market has bet on interest rate cuts several times, and when the Fed didn't act, the market was caught off guard. It's not hard to imagine that in the coming months, some unexpected CPI or employment data could prompt traders to change course. It's just that no one was worried about it after the Fed meeting on Wednesday afternoon.
CICC's overseas team released an analysis after the Fed meeting, saying that the Fed's softening attitude at this meeting means that the official announcement of interest rate hikes is over, and interest rate cuts may come sooner. However, CICC's macro team pointed out that there is still a lot of uncertainty about the Fed's path of interest rate cuts next year, and the risk of stubborn inflation and economic non-landing may affect the direction of monetary policy. **Wall Street news, welcome**APP to see more.