S&P 500 Retreats Towards 3960 As Traders Focus On Target’s Results

Key Insights

• Sell-offs in Target and Micron stocks hurt market sentiment today. 
• Energy stocks moved lower as traders decided to take profits off the table amid a pullback in oil markets. 
• A successful test of the support at 3960 will push S&P 500 towards the next support level at 3920.

Target And Micron Push The Market Lower

S&P 500 pulled back towards the support at 3960 as traders reacted to the weak report from Target and warning from Micron.

Target missed analyst estimates on earnings and said that it planned to cut up to $3 billion in costs in the next three years.

Micron said that the market outlook for the next year had weakened and adjusted its capex plans accordingly.

Carnival was among the biggest losers in the S&P 500 today after the cruise operator said that it would issue $1 billion of convertible senior notes. At the time of writing, the stock was down by almost 14%. Cruise companies carry significant debt burdens after the pandemic, and their debt levels will likely remain a material problem in the upcoming years.

Energy stocks were under significant pressure today as WTI oil made an attempt to settle below the $85 level. Many stocks in this market segment are trading near yearly highs, so some traders want to take profits off the table.

Tech stocks were hit by Micron’s warning. Micron’s announcement put pressure on shares of other semiconductor stocks, like AMD and NVIDIA.

It should be noted that Treasury yields moved lower today, but this move did not provide any support to the stock market. At this point, it looks that S&P 500 will need additional positive catalysts to settle above the 4000 level.

S&P 500 Tests Support At 3960

S&P 500 has recently made another attempt to settle above the 4000 level but lost momentum and pulled back towards the support level at 3960. If S&P 500 manages to settle below this level, it will gain additional downside momentum and move towards the next support at 3920. A successful test of the support level at 3920 will open the way to the test of the support at 3885.

On the upside, the nearest resistance level for S&P 500 is located at 4000. A move above this level will lead to the test of the next resistance at 4015. In case S&P 500 gets above 4015, it will head towards the resistance level at 4040.

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