Fed pause? Why the stock market may suffer a classic 'sell the news' response.

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U.S. stocks are on an “unsustainable” near-term trajectory, leaving them vulnerable to a “sell the news” pullback if the Federal Reserve holds interest rates...

The U.S. stock-market rally is on an “unsustainable” near-term trajectory, leaving it vulnerable to a pullback Wednesday if the Federal Reserve, as expected, holds interest rates steady, a top Wall Street technician warned.

“Markets are on a torrid pace this week in anticipation of a Fed pause today. We suspect it to be a classic sell the news event, as the trajectory has become near‐term unsustainable,” said Jeff deGraaf, chairman and head of technical research at Renaissance Macro Research, in a Wednesday morning note.

Fed-funds futures traders have priced in a roughly 60% chance of another 25 basis point rate increase in July, according to the CME FedWatch tool.

 

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