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This afternoon, the S&P500 is swinging between gains and losses as traders are bracing for volatility on a triple-witching expiry day and rebalancing of benchmark indexes including the S&P500. During the last hour of the stock market trading session on the third Friday of every March, June, September, and December, there are three kinds of security expiration: stock market index futures, stock market index options, and stock options. The option expiration date and the portfolio rebalancing activity usually bring very large size volumes and drive market volatility higher, erasing the advantages of technical analysis. The key takeaway: expect volatility to remain high and more importantly; it is best not to draw any conclusion from today's price action.

Despite the Federal Reserve holding an aggressive tone embarking on a tightening path of its first rate hike since 2018 and six more remaining for the year, markets still welcomed the news as it removes uncertainty. Entering the week at a severely oversold level, global equities rebounded this week, poised for first weekly gain in six weeks and the best weekly performance since 2020. What now? Stocks remain somewhat oversold and despite benchmarks looking not too deep into correction territory, many stocks have corrected significantly. War remains the dominant drive as WTI Crude oil hovers above USD100 pb. There are no signs of a breakthrough in Ukraine/Russia negotiations. China seems to be taking aggressive steps to alleviate the economic pain of Covid lockdowns. Fiscal and monetary policies continue to be the main drivers for stocks, and central bankers are determined to combat inflation which is eating into people's spending power. Markets will likely need more time to digest the current environment and should remain particularly reactive to inflation signals and changes in key commodity prices. 

The Federal Reserve approved raising interest rates by 0.25%, its first hike since December 2018. Fed officials indicated an aggressive path ahead, with rate hikes at each of the remaining meetings in 2022. Officials also lowered their forecasts for economic growth this year and raised their outlook for inflation. The last rate hike occurred in December 2018, and then the Fed had to backtrack in July 2019 and begin cutting.  Powell said he sees the probability of a recession over the next year as not very high. He said the FOMC expects growth to continue and labor market to remain healthy. Markets reacted strongly to prospects of steep rate hikes over the next two years. Expects inflation to return to 2%, but it will take longer, in part as a result of supply chain issues and the war in Ukraine/Russia. The Fed predictions of where rates will move in next few years (Dot Plot) is wide, which suggests Fed officials are highly uncertain about where things are going. Officials repeated environment is highly uncertain and a major goal is to provide price stability. Yields on the US 10-year Treasury touched 2.25%, before retreating. US 2-year Treasury jumped to 2% ! Stocks whipsawed, but remain mostly positive, with Nasdaq up 1.5%, S&P 500 up 0.7%

Core retail sales, which strip out spending on cars and vehicle parts, rose only 0.2% through the month, falling short of the 0.9% estimates. Similarly, spending at US retailers and restaurants rose by 0.3% in February as inflation intensified, falling just below the forecast for a 0.4% gain. The report indicates demand starting to cool as higher prices are eroding consumers' purchasing power. Market reaction is slightly negative so far, with S&P500 futures losing more than 25 points since the release. However, the real driver of stocks should remain the FOMC meeting this afternoon.

Stocks surged after China announced measures to keep markets stable, and stimulate growth as it responds to a significant market sell-off, major headwinds in the property market, and concerns over overseas listings and internet companies. Similarly, there are signs that Covid cases in China could be topping. Hong Kong stocks rose the most since 2008, with Alibaba and Tencent gaining over 20%. Sentiment for Chinese equities remains awful, despite this bounce (Chinese stocks still lower than five days ago). Market sentiment is improving as there are signs talks in Ukraine are progressing. Nasdaq up 1.8% pre-market, Stoxx50 up 2.8%, Bitcoin up 5%. All in all, the Fed is a more significant market-mover and the Fed communication tonight will be key. It is important to note that despite the high uncertainty around tightening, slowing down economy, inflation, war, supply chain issues, the markets face a wall of worry and are oversold. Conditions could gradually form for a sustained bounce, but current markets conditions and high volatility still warrant caution.