S&P 500 Looks Ready To Settle Above The 4040 Level

Key Insights

• U.S. markets are closed, but traders will return tomorrow for a short trading session. 
• From a big picture point of view, S&P 500 continues to rebound after an unsuccessful test of the 3500 level, which marked the yearly bottom. 
• A move above the 4040 level will provide S&P 500 with an opportunity to gain additional upside momentum. 

S&P 500 Will Remain Extremely Sensitive To The Interest Rate Outlook

U.S. markets are closed today for the Thanksgiving holiday. Traders will return tomorrow to focus on the first results of Black Friday in the short trading session.

Traders will also stay focused on the interest rate outlook, which has changed after the release of dovish FOMC Minutes. Currently, the FedWatch Tool indicates that there is a 75.8% probability of a 50 bps rate hike at the next Fed meeting in December.

Markets expect that the target rate would peak at 500 – 525 bps in summer 2023, and that the Fed would begin to cut interest rates from September 2023. Any changes in the “peak rate” outlook will have a significant impact on S&P 500.

Tomorrow, traders will focus on retailer stocks. Trading in this market segment will likely be volatile in the first hours of the trading session. Traders should keep in mind that trading volume will remain low as many market participants have left for a long weekend and will get back to their desks on Monday.

S&P 500 Must Settle Above 4040 To Continue Its Rebound

Taking a look at the weekly chart, S&P 500 continues to rebound after an unsuccessful test of the 3500 level. S&P 500 has already gained more than 15% from October lows, so some traders may want to take profits off the table.

At the same time, S&P 500 looks ready to settle above the nearest resistance level at 4040 and continue the rebound. If Treasury yields move lower and the U.S. dollar continues to lose ground against a broad basket of currencies, S&P 500 will have a good chance to develop additional upside momentum.

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