S&P 500 Rallied Above The 50 EMA As Treasury Yields Declined

Key Insights

• Weaker dollar and lower Treasury yields provided material support to stocks. 
• The disappointing economic data also served as a positive catalyst for the market.
• The market’s optimism will be tested by earnings reports from Alphabet and Microsoft. 

Stocks Moved To Multi-Week Highs

S&P 500 gained strong upside momentum today as Treasury yields pulled back from their recent highs. CB Consumer Confidence and Case-Shiller Home Price Index reports indicated that high interest rates have started to put material pressure on the economy. These reports were bullish for stocks as disappointing economic data may force the Fed to be less hawkish.

Today’s rebound was broad, and all market segments were moving higher. REITs enjoyed strong support due to lower Treasury yields.

PayPal  gained 7% after Amazon added Venmo as a payment option ahead of the holiday season. Amazon’s decision will boost PayPal’s results in the fourth quarter.

Meta gained 6% as traders bet that the worst has been already priced in ahead of the earnings report, which will be released tomorrow after the market close.

The market optimism was tested by major earnings reports, which were released after the market close.

Alphabet reported revenue of $69.09 billion and earnings of $1.06 per share, missing analyst estimates on both earnings and revenue. The company’s stock has immediately found itself under pressure and moved below the $100 level.

Microsoft  reported revenue of $50.1 billion and earnings of $2.35 per share. The company noted that Microsoft Cloud revenue was $25.7 billion, up by 24% on a year-over-year basis. The strong growth in the cloud segment did not provide material support to the stock in the post-market session, and Microsoft moved below the $250 level.

Visa reported revenue of $7.8 billion and adjusted earnings of $1.93 per share, beating analyst estimates on both earnings and revenue. The company increased its dividend to $0.45 per share and announced a $12 billion share repurchase program. While the increase in the dividend and the stock buyback were good news for Visa shareholders, the stock was mostly flat in the post-market session.

Traders should note that these stocks will be sensitive to comments made during the earnings calls, and tomorrow’s dynamics may differ from the price action in the post-market session.

S&P 500 Pulls Back From Highs After Alphabet Misses Analyst Estimates

From a big picture point of view, S&P 500 managed to settle above the 50 EMA at 3815 and continued its rebound. The nearest resistance level for S&P 500 is located at 3885. In case S&P 500 settles above this level, it will move towards the next resistance level at 3915. A successful test of this level will open the way to the test of the resistance at 3960.

On the support side, the nearest support level for S&P 500 is located at 3835. If S&P 500 declines below this level, it will head towards the next support level at 3805. A move below 3805 will open the way to the test of the support at 3760.

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