There were some wild moves across US stock indices last night as investors responded to the Federal Reserve’s FOMC statement and Fed Chair Jerome Powell’s subsequent press conference. The major indices were in negative territory ahead of the rate announcement, but then bounced sharply after the FOMC left rates unchanged as expected, and on the back of a benign statement. Then they pulled back sharply and eventually ended the session mixed. There were two key drivers for market action. Firstly, the FOMC announced that, starting next month, they would be cutting back their balance sheet reduction programme to $60 billion per month, from $95 billion. This would allow for a more gradual reduction which means that the central bank should be able to go further in cutting back the size of its balance sheet. So far, they have managed to reduce it to around $7.4 trillion from $9 trillion in June 2022. Secondly, Mr Powell made it clear that rate hikes weren’t an option. Instead, rates would have to stay at their current levels for much of this year, thanks to one full quarter of hotter-than-expected inflation releases. He noted the robustness of the US economy along with the solid labour market. But the Fed wanted to have confidence that inflation is on a sustainable path to its 2% target before they will risk a rate cut. There has been little change in the market’s forecast for the Fed Funds. According to the CME’s FedWatch Tool, the expectation is for one 25-basis point cut before the end of this year. Despite some recent attempts, the S&P has failed to hold above 5,100 and this is its first significant area of resistance. If it can achieve escape velocity and break above here convincingly, then there’s the possibility that it goes on to hit a fresh all-time high. But as can be seen in the daily chart above, the S&P is currently testing the lower support line of the upwardly-sloping trend channel. A break below here raises the likelihood of more downside. Investors have become increasingly cautious over the past month, and major market moves are now data-dependent to a large degree. Friday sees the latest Non-Farm Payroll release, while the first quarter earnings season remains a potential catalyst for market movements. Apple reports after tonight’s close.