Crypto, stocks in a volatile week ahead of Fed decision, jobs data

Crypto, stocks in a volatile week ahead of Fed decision, jobs data

After a promising comeback in October, crypto and stocks fell on the final trading day of the month as a busy week for economic data began on Monday.

The S&P 500 and Nasdaq indexes lost 0.6% and 1.1%, respectively, at the start of Monday's trading session. Ether and Bitcoin also saw losses, both falling about 1%.

"This week is full of potentially important events, and it is no exaggeration to say that this week's events could lead to another 5% rally in the S&P 500 or give back much of the gains of the last two weeks," said Tom Essaye, founder of Sevens Report Research.

Big Tech posted crypto-like losses late last week after a series of disappointing quarterly reports, but markets remained stable overall.

Amazon lost more than 18% during Thursday's after-hours session after the company missed earnings. Meta closed nearly 25% lower on Thursday, ending the trading session at its lowest price since 2016 after posting a 4% year-over-year decline in sales. Meta is down more than 72% year to date, while Amazon is down 40%.

Meta was trading nearly 5% lower at the time of publication on Monday, while Amazon was down about 2%.

Still, the Nasdaq Composite rose about 3% in October, a reprieve from an otherwise disappointing year. The tech-heavy index has fallen more than 30% since the start of 2022.

Similarly, the S&P 500 has returned about 8% for the month, but is still down more than 19% for the year to date. But the release of labor market data on Tuesday and the Federal Reserve's interest rate decision on Wednesday are preparing markets for a turbulent November.

“The recovery itself, while impressive, was not that remarkable,” Jim Paulsen, chief investment strategist at Leuthold Group, said of stocks’ comeback in mid-October. “Bear markets often have strong upswings that ultimately fail.”

Predicted 75 bps

Federal Open Market Committee members entered their blackout period on Oct. 22, but ahead of the quiet period before Tuesday's meeting, several members expressed their determination to get inflation under control once and for all.

Chicago Fed President Charles Evans and Fed Vice Chairman Lael Brainard, as well as Cleveland Fed President Loretta Mester and others insisted in recent weeks that the central bank would not shy away from higher interest rates to combat inflation.

On Monday, futures markets predicted an 86% chance of a 75 basis point interest rate hike on Wednesday Data from the CME group.

“It is important to temper our enthusiasm and recognize that the S&P 500 at these levels is now exceeding the limits of justification given actual market realities,” Essaye said.

"First, pigeon migrations are still migrations. Yes, the Fed could certainly reduce the intensity of its rate hikes starting in December, but it's still the final rate that really counts, and unless that falls to (and ideally below) 4.50%, there is no real dovish shift from the Fed."

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The post “Crypto, Equities in Volatile Week Ahead of Fed Decision, Jobs Data” is not financial advice.