S&P 500 (SPY) Gains Ground As Rebound Continues

Key Insights

• S&P 500 moved higher as traders continued to buy beaten stocks.  
• The strong report from Netflix provided additional support to S&P 500 in the post-market session. 
• A move above 3730 will push S&P 500 back towards the recent highs near 3760.

S&P 500 Gained More Than 1% In Broad Rebound

S&P 500 lost momentum after testing the resistance level at 3760 and pulled back towards the 3720 level. However, stocks were still able to record healthy gains for the day.

Industrial Production report, which indicated that Industrial Production increased by 0.4% month-over-month in September, provided material support to stocks. However, it looks that continuation of the technical rebound was the main driver for the stock market today.

Cruise stocks were among the biggest gainers today. Carnival Corporation, Norwegian Cruise Line Holdings, and Royal Caribbean Cruises were up by 7-11% today.

Lockheed Martin gained 8% after beating analyst estimates on earnings and increasing stock buyback. Salesforce was up by more than 4% after Starboard Value acquired a stake in the company.

Interestingly, leading energy stocks like Exxon Mobil and Chevron did not move lower despite the strong sell-off in the oil markets.

From a big picture point of view, the rebound was broad, and all market segments moved higher. Traders continued to hunt for bargains and bought beaten stocks.

In the post-market session, Netflix stock rallied towards $275 after releasing its earnings report. The company reported revenue of $7.48 billion and earnings of $3.19 per share, exceeding analyst expectations on both earnings and revenue. Talking about the fourth-quarter guidance, Netflix noted that strong dollar remained a significant headwind. In the last quarter of this year, Netflix expects to report revenue of $7.8 billion.

United Airlines report beat analyst estimates, pushing the stock towards $40 in the post-market session. The company noted that strong COVID recovery trends would continue to overcome the recessionary pressures. Previously, traders were worried that recession fears may hurt consumer activity, but it looks that demand for air travel remains strong.

S&P 500 Moves Higher After Netflix Beats Expectations

The strong report from Netflix provided support to S&P 500 futures and pushed them above the resistance at 3730. RSI remains in the moderate territory, so S&P 500 has plenty of room to gain additional upside momentum in the upcoming trading sessions.

In case S&P 500 manages to settle above 3730, it will move towards the next resistance, which is located near the recent highs at 3760. A move above this level will open the way to the test of the resistance at the highs of the previous rebound at 3805.

On the support side, a move below 3730 will push S&P 500 towards the support at 3700. In case S&P 500 declines below this level, it will head towards the next support at 3675. A successful test of the support at 3675 will open the way to the test of the support at 3640.

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