Stock Market Volatility Rises Ahead of Federal Reserve Meeting

Strategic Insights -

The stock market is showing signs of increased anxiety ahead of this week's Federal Reserve meeting, with indexes trading lower in the first hour of Tuesday's session. Wholesale prices surged in November, fueling inflation worries. The Nasdaq composite fell 1.1% and is below its 50-day moving average for the first time since December 3-6. Technology stocks, in particular, are feeling the pressure, with the Nasdaq composite's decline driven in part by a 1.4% drop in the Technology Select Sector SPDR.

Key Takeaways:

  • The producer price index jumped 9.6% in November from a year ago and 0.8% from the previous month, both measures coming in above economists' estimates.
  • The new omicron variant of Covid-19 threatens to slow the economy's recovery, although broad lockdowns are not expected.
  • The Fed is expected to update its monetary policy at the meeting, with some analysts predicting that they may slow down their asset purchases further.
  • Tesla's valuation fell below $1 trillion, and CEO Elon Musk's sales have brought his total to nearly $12 billion since November.
  • Electric vehicle stocks, including Tesla, Nio, and Rivian Automotive, were broadly lower, with Tesla falling further below its 50-day moving average.
  • AMC Entertainment Holdings plunged nearly 7%, sinking deeper below its 200-day moving average, and other meme stocks such as GameStop and RobinHood are also collapsing.

Statistics:

  • The producer price index jumped 9.6% in November from a year ago and 0.8% from the previous month.
  • The Nasdaq composite fell 1.1% and is below its 50-day moving average for the first time since December 3-6.
  • The Technology Select Sector SPDR fell 1.4% and is the weakest S&P sector ETF.
  • Tesla's valuation has fallen below $1 trillion.
  • CEO Elon Musk has sold nearly $12 billion worth of Tesla stock since November.
  • AMC Entertainment Holdings plummeted nearly 7% and sank deeper below its 200-day moving average.

Sources:

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  • Bureau of Labor Statistics (https://www.bls.gov/)