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18.02.2025 11:57 AM
Bullish trend under threat? Why Fed decisions could cool markets?

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The US stock market opened cautiously after the holidays as investors are assessing the Federal Reserve's next moves and awaiting key economic reports.

Futures on major indices show a modest attempt to rise, but uncertainty remains about the market's direction. Investors are focused on the release of the FOMC meeting minutes and PMI reports, which will help gauge the US economic outlook.

Fed factor: rates remain unchanged

On Monday, Federal Reserve official Christopher Waller stated that the regulator is in no hurry to cut interest rates. He stressed that unless inflation data confirms the slowdown observed in 2024, the Fed may maintain its restrictive policy.

This statement cooled market expectations for an early rate cut, affecting stock index dynamics.

In addition to monetary policy, investors are watching corporate earnings. Major companies, including Arista Networks, Occidental Petroleum, Analog Devices, Walmart, and Constellation Energy, will report results this week. Growing interest in tech and energy sector earnings could increase market volatility.

Additionally, February PMI data for the US manufacturing and services sectors will be released. These reports will highlight current economic trends and potential growth risks.

S&P 500 seeks new highs

At the market open, the S&P 500 stood at 6,134, continuing its upward trend. Technical indicators signal overbought conditions, but there are no clear signs of a reversal yet.

The nearest resistance is at 6,180–6,200, where profit-taking may occur. Support is in the range of 6,080–6,050, and a break below could push the index down to 6,000.

Nasdaq 100: bullish momentum to continue?

The Nasdaq 100 trades near 22,209, maintaining its upward momentum. The nearest resistance is at 22,400, and breaking above this level could open the way to 22,600.

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If buying pressure weakens, the index could retreat to support at 21,900–21,800. Oscillators indicate a possible slowdown in momentum, but the trend remains bullish.

What to happen: correction or further growth?

Despite last week's positive momentum, the market remains under uncertainty. FOMC minutes and economic reports will set the market's direction.

If the Fed confirms a cautious approach to rate cuts, bullish sentiment may cool temporarily. However, strong PMI and earnings reports could help indices hold their levels or reach new highs.

Investors should watch key support and resistance levels closely, as the coming days could shape the market's direction. Fundamental data, the Fed's stance, and investor reactions to uncertainty are likely to determine a future movement.

Natalya Andreeva,
Analytical expert of InstaForex
© 2007-2025
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