Markets Edgy Ahead of Critical Fed Meeting

This week will be critically important for investors’ fortunes in 2022 as the Federal Reserve hosts a mid-week meeting to discuss the expected interest rate hikes. Plus many major firms from Apple and Microsoft to American Express and Caterpillar will announce the results of their earnings reports. All of which are hoped to bring some much-needed good news after one of the worst trading weeks in months.

The Nasdaq slumped over 7% and it continued what has been a terrible start to the year with the index falling over 15% from its high. The S&P 500 was equally hard hit with a fall of nearly 6% which is its worst weekly performance since March 2020. Equally troubling is the fact that the S&P500 closed the week below its 200-day moving average which is something that it hasn’t done since the troubled days of June 2020. Not to be outdone, the Dow Jones Industrial Average suffered a fall of nearly 5% in its worst weekly performance since October 2020.

Certain companies were especially hard hit with Netflix losing 22% of its share price after subscriber figures proved disappointing. JP Morgan Chase also had a difficult week following a slowdown in trading activity and a rise in expenses.

What will happen at the Fed meeting?

This Tuesday and Wednesday will see a meeting at the Federal Reserve that’s expected to provide further information about interest rate hikes in 2022. The overriding impression is that there will be a 0.2% rise in interest rates in March. This will be introduced if the trends continue toward rising costs from company earnings and higher prices that have produced some of the worst inflation figures in decades.

Such an event would be based on the results of more economic indicators that are due for release this week. These include an inflationary assessment that comes after the personal consumption figures are released on Friday. There will also be a report on the GDP of the fourth-quarter due to be issued on Thursday.

Key industry reports due this week

Several major firms are due to release reports over the next few days. All eyes will be on Microsoft and Apple as the two biggest market-cap stocks will issue their reports on Tuesday and Thursday respectively. Another big tech brand, Tesla, will issue its financial report on Wednesday.

Other major earnings reports due to land this week include those from American Express, Caterpillar, IBM, Johnson and Johnson, General Electric, Boeing, McDonald’s, MasterCard, Chevron and Intel.

Many of these are in the tech-heavy Nasdaq index that is expected to be especially hard hit should the interest rate hikes go ahead as planned. Such a move would see investors flocking towards the supposedly ‘safe’ assets such as gold and bonds rather than the more volatile stocks in the tech industry. All of which means that this will be a critical week for how the remainder of 2022 pans out.

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