Stock futures on the bearish pullback after ECB delivers jumbo rate-hike

ECB raised the interest rate by 75 bps today which analysts largely expect. The central bank cited that more rate-hike is planned to combat inflation. ECB now sees average inflation of 8.1% in 2022, 5.5% in 2023, and 2.3% in 2024. After the rate-hike announcement, DJIA futures immediately turn to negative 80 points.

We might see more bearish pressure in the stock market while traders await the Fed interest-rate decision this month.

Technical Analysis

Dow Jones Industrial Average (INDU)

DJIA index bearish streak finally stopped yesterday as a bullish close was printed. The index might start a bullish correction but stay bearish until this month’s FOMC meeting. If the index could print a higher low from the current level and a higher swing high then the overall trend might turn bullish.

Pepsico Inc (PEP)

PEP share prices managed to return above the daily SMA 200 and print a new higher swing high. The share prices then undergo a bearish correction to test the daily SMA 200. There is a bounce reaction from the averages which might signal further upside. Traders might want to stay on the bullish side and wait for a bearish correction toward the support level to enter long positions.