The U.S. stock market anticipates potential challenges ahead
The US stock market has recorded a negative week with some price corrections potentially ahead still as traders consider economic data and the trajectory of monetary policy.
While the market could remain near the higher end of this year’s range, uncertainty could continue to weigh on sentiment.
Attention will remain on Apple which pulled the market down after traders priced in the impact of the Chinese move to ban iPhone use for government officials.
The company could see an impact on its sales in one of its major markets. However, the tech sector could continue to see support from the developments around AI.
In addition, the rebound in oil prices during the last two weeks could affect the market as several sectors could see their input costs increase.
The commodity has surged after Saudi Arabia and Russia extended their production cuts until the end of the year. An increase in oil prices could affect the disinflation process, putting some pressure on the Federal Reserve.
Traders could closely monitor upcoming economic data releases as the Federal Reserve’s policy meeting approaches and as the communications blackout period starts for the institution.
Markets expect the Federal Reserve to maintain an aggressive monetary policy and keep high interest rates levels for longer after strong jobs and PMI data this week. Traders could also account for the risks of another interest rate hike later this year.