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A major crash in the Hang Seng index has put Wall Street under pressure at the start of the third week of September. All eyes will be about Fed’s decision on tapering its easy monetary policy.
Wall Street continues to remain under pressure as it could be a disappointing start this week. The Dow Jones futures are down by staggering 450 points in the early morning trade on Monday, September 20.
Similarly, the S&P 500 futures and Nasdaq 100 futures are also trading in the negative territory. Wall Street came under pressure amid heavy selling in the Hong Kong stock market during the Asian trading session. The entire Hang Seng index is down by 4% with fears surrounding the China Evergrande Group. As a result, other property stocks are also down significantly.
This September has been the month of extreme volatility on Wall Street. However, the market has been behaving as per historical trends with September being a month of subdued performance. This could also be the first month of 2021 when Dow Jones and S&P 500 could end up in the negative zone.
Last Friday, all three indices corrected between 0.5% to 1% marking strong volatility. Since July 19, the S&P 500 clocked its biggest trading volumes last Friday. It was nearly double its 30-day average trading volume.
Besides, volatility ensued as Friday’s trading session coincided with the expiration of index options, stock options, index futures, and stock futures. This was a quarterly event also popular as “quadruple witching”.
What Can Influence Early Morning Trade Today: All Eyes on the Fed Meeting
The Fed’s much-awaited meeting on monetary policy and fiscal stimulus will happen this week. There’s have been multiple reports of the Fed rolling back on its bond-purchase plans. Besides, the US central bank is also looking to taper the ease in the monetary policy.
On Wednesday, September 22, Fed Chairman Jerome Powell will be briefing the press about the same. Powell has already hinted at tapering the Fed’s easy monetary policy. However, Wall Street investors have been awaiting more specifics into this matter. In a note to investors, Raymond James Chief Investment Officer Larry Adam wrote:
“Factors to build a ‘wall of worry’ are present (i.e., China, supply chain issues, Fed policy, debt ceiling, infrastructure/tax bill), though markets are not too disturbed for now. Normal pullbacks and volatility are to be expected, and we would use these periods as opportunities”.
Besides, some of the top companies are likely to declare their quarterly earnings this week. This includes the likes of Nike, FedEx, Adobe, Costco, etc.