S&P 500 Rebounds From Session Lows As Traders Shrug Off Bullard’s Comments

Key Insights

• Fed’s Bullard said that the Fed might have to raise rates by at least 100 bps to fight inflation. 
• Stocks opened lower, but traders rushed to increase their positions at cheaper levels. 
• A move above 3960 will push S&P 500 towards the resistance at 4000.

Tech Stocks Lead The Rebound

S&P 500 rebounds from session lows and is moving closer to the positive territory as traders buy stocks after the pullback. NASDAQ Composite has already pared today’s losses.

Stocks were under strong pressure at the start of today’s session as traders reacted to the hawkish comments of Fed’s Bullard, who said that the Fed might need to raise rates by 100 bps in a dovish scenario. Bullard’s hawkish assumptions would lead to rates above the 7% level.

Not surprisingly, Treasury yields and U.S. dollar moved higher, which was bearish for stocks. The sell-off in commodity markets has put additional pressure on S&P 500.

However, the stock market managed to gain upside momentum despite stronger dollar and higher Treasury yields. Tech stocks led the rebound, driven by Cisco’s strong earnings report. Apple enjoyed strong support and managed to get back to the $151.50 level after testing the 20 EMA at $146.35.

Retailer Bath & Body Works was the strongest performer in the S&P 500 today. The stock gained 25% after the company beat analyst estimates on both earnings and revenue and raised guidance.

Norwegian Cruise Line Holdings declined by 6% after Credit Suisse downgraded the stock from outperform to underperform. According to Credit Suisse, the stock is significantly overvalued compared to its peers Royal Caribbean and Carnival.

From a big picture point of view, the rebound of S&P 500 indicates that the market sentiment remains bullish, and traders are ready to increase their long positions during pullbacks.

Resistance At 3960 In Sight

Currently, S&P 500 is trying to get to the test of the nearest resistance level at 3960. A move above this level will push S&P 500 towards the resistance at 4000. If S&P 500 manages to settle above 4000, it will head towards the 4015 level. A successful test of the resistance at 4015 will open the way to the test of the next resistance at 4040.

On the support side, the nearest support level for S&P 500 is located at 3920. If S&P 500 declines below this level, it will head towards the support at 3885. A move below this level will push S&P 500 towards the 20 EMA at 3865.

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