Alice Wang
Sep 01, 2022 15:00
The S&P 500 fluctuated wildly throughout the trading day on Wednesday, but because the employment report is due on Friday, I anticipate that things will settle down a little. Having said that, I don't believe that the market is one in which you need necessarily take a lot of risk. After all, it wouldn't be long until some kind of news sent this market into a tailspin once again.
Of course, the S&P 500 will be watching to see what the Federal Reserve decides to do in response to the employment report. However, despite the fact that many traders are attempting to figure out how to get to that point, I honestly don't believe that there is a scenario in which the Federal Reserve loosens its monetary policy.
The market will then have to accept that the Federal Reserve will continue to remain tight since there is so much inflationary pressure. However, I believe that this market still has room to grow, therefore we may retest the bottom. People worried that the Fed would have to tighten policy will benefit if the employment data are very strong.
On the other hand, if Friday's employment report turns out to be somewhat weak, some would cite that as justification for the Fed to halt quantitative tightening sooner rather than later. Of course, it's a pipe dream, but that's what the market will attempt to infer. Thursday is probably going to be a pretty choppy and quiet day.