US stocks could be exposed to some volatility and price corrections after the continuous gains of the last few months in particular as traders could become more cautious before the Federal Reserve’s meeting next week and could move to secure their gains.
Company earnings could also contribute to the volatility. The market has benefited until now from the surge in interest in AI as well as hopes of a softer monetary policy stance.
In this regard, the Federal Reserve is expected to hike rates potentially for the last time if inflation continues to move toward the central bank’s goal.
Bas Kooijman, CEO and Asset Manager of DHF Capital said, “However, traders could remain attentive to the comments of the Federal Reserve’s president.
“If a more stable outlook for interest rates is confirmed, the stock market could record a stronger performance. This could come in addition to reduced concerns about a potential recession.
“However, commercial real estate continues to be a source of concern as financing costs rose and could remain elevated for some time. In addition, remote work trends have reduced the need for offices and could continue to weigh on the sector over the longer term.
“In the meantime, traders could continue to monitor company earnings. Strong earnings from large banks have helped alleviate some concerns about the solidity of the financial sector although regional banks continue to be under some pressure and could remain under scrutiny.
“The tech sector is also seeing some mitigated earnings from Tesla and Netflix and could look forward to Alphabet’s and Microsoft’s results next week for potential support.”