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16.11.202110:08 Forex Analysis & Reviews: Weekly US stock market review for November 16, 2021

Exchange Rates 16.11.2021 analysis

S&P 500

The US market is trading near annual highs, but its upside momentum has almost fizzled out.

Last week, the market came under pressure from fresh data on inflation. The inflation rate in the United States rose 6.4% per annum in October, hitting a 30-year high. According to its own regulations, the Fed must begin to take measures to lower inflation when the rate exceeds 2.5% per annum. However, as we can see, the Fed is clearly in no hurry to raise the interest rate, which is still near zero. The regulator fears that the markets could collapse, which would cause a slowdown in the economy. However, high inflation creates the risk of stagflation in the future. It could sow the seeds for a future recession while maintaining high inflation.

In general, the US stock market dropped significantly over the week. However, by the beginning of the new week, it is likely to recoup most of its recent losses.

Over the week:

The Dow Jones Industrial Average dropped by 310 points or 0.9%. Trading range: 36,400 - 36,090

The NASDAQ slid by 150 points or 1%. Trading range: 16,000 - 15,850

The S&P 500 index lost 20 pips or 0.4%. Trading range: 4,700 - 4,680

Forecast:

Dow Jones trading range: 35,900 - 36,300

NASDAQ trading range: 15,700 - 16,000

S&P 500 trading range: 4,650 - 4,750

Conclusion. In the long term, the Fed will most likely tighten its monetary policy, which means that an interest rate hike as an effort to tame inflation is inevitable. Besides, a slowdown in the US economy is imminent. This will lead to a strong correction in the stock market. In this case, it is only a matter of time and the levels the market can reach before a fall. In addition, it can be seen that the US market is overheated. This suggests that a steep drop in the stock market could present a risk to the economy.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Jozef Kovach,
Analytical expert of InstaSpot
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