S&P 500 Climbed Above The 4000 Level

Key Insights

• S&P 500 gained additional upside momentum at the start of the week. 
• Traders bet that the Fed would be less hawkish at the next meeting. 
• The market sentiment stays bullish, and traders ignore recession worries.

S&P 500 Starts The Week On A Strong Note

S&P 500 is trying to settle above the 4000 level as demand for stocks remains healthy despite stronger dollar and rising Treasury yields. The tech-heavy NASDAQ Composite moved above the 11,300 level.

Consumer Inflation Expectations increased from 5.4% in September to 5.9% in October, compared to analyst forecast of 5.3%. Interestingly, this report had no impact on market dynamics.

Bulls have also ignored the NYT report on Amazon‘s plans to lay off about 10,000 workers. Amazon stock declined by about 1% during today’s trading session.

Most market segments have been moving higher today, although REITs were under pressure due to rising Treasury yields.

Meanwhile, comments from Fed Vice Chair Lael Brainard, who said that it would be appropriate to reduce the pace of rate hikes, provided additional support to the market.

From a big picture point of view, traders bet that the Fed will reduce the pace of its rate hikes and may even adjust its view on the “sufficiently restrictive” level of interest rates.

The dynamics of Fed policy expectations serve as the main driver for markets. Traders do not rush to take profits after the recent rally as they prepare for a less hawkish Fed.

S&P 500 Tests Resistance At 4000

S&P 500 managed to get above the 4000 level and is trying to get to the test of the next resistance at 4015. A move above 4015 will push S&P 500 towards the resistance level at 4040. In case S&P 500 manages to settle above this level, it will head towards the resistance at 4070.

On the support side, S&P 500 needs to settle back below 4000 to have a chance to gain downside momentum in the near term. The next support level for S&P 500 is located at 3960. In case S&P 500 declines below this level, it will move towards the support at 3920. A successful test of the support at 3920 will open the way to the test of the next support at 3885.

For a look at all of today’s economic events, check out our economic calendar.