After Monday's relief rally, attention shifts to earnings and policy fronts

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After Monday's relief rally, global stock markets experienced a rebound in the S&P 500, snapping a six-day losing streak. Investors remain cautious on both the earnings and policy fronts. The upcoming Big Tech earnings reports from Meta, Microsoft, and Alphabet are expected to influence short-term market dynamics significantly. The recent downturn in the stock market is linked to uncertainty surrounding the timing of Federal Reserve easing and evolving inflation landscape. The Federal Reserve's stance on rate cuts is still debated, especially after Chair's more hawkish tone last week. Thursday's US data and Friday's release of the Super Core derivative from the PCE index will be crucial in determining the Fed's policy stance. The bond market has adjusted to unexpectedly hot data, now pricing in just 1.5 rate cuts for this year. The interconnectedness of macroeconomic policy and financial markets is an ongoing storyline. Policymakers need to heed caution in making short-term decisions influenced by recency bias.

#StockMarket #Earnings #Policy #FederalReserve #Inflation