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The S&P 500 Index is closing in on a crucial technical hurdle that will indicate whether it’s rebound from June lows is more than just a bear-market bounce. For bullish momentum to extend, the benchmark gauge would need to make a decisive break above a formidable resistance zone between 4,158 and 4,178 that it has struggled to stay above since February.
If the index breaks above 4,178, the next phase of potential resistance would sit at prior intraday lows during selloffs on March 7 (4,200), Feb. 23 (4,222) and April 22 (4,268).
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Source: Bloomberg
Financial conditions are tightening faster and harder than the last time the Federal Reserve raised interest rates, as demonstrated by the Bloomberg Financial Conditions Index, and the bank’s decision to stay the course raises the risk of a deeper, longer recession.
Though the swift moves should help cool inflation, they challenge the Fed’s ability to balance between too much and too little monetary restraint.
Source: Bloomberg
The tech-heavy Nasdaq 100 has rallied almost 20% from the June depths of bear market as bond yields retreated amid fears of a looming recession. Technology companies have led this year’s equities selloff as the prospect of higher rates meant a bigger discount for the present value of future profits, hurting growth shares with the highest valuations. The recovery has been led by Apple Inc., Amazon.com Inc. and Tesla Inc.
Source: Bloomberg
Over the past two weeks, the rate on a 30-year fixed mortgage has plunged nearly 40 basis points — a welcome respite for homebuyers. That’s the sharpest decline since late 2008 when the global financial crisis gripped the economy. The contract rate on a 30-year mortgage fell to 5.43% in the week ended July 29, according to data released Wednesday by the Mortgage Bankers Association.
Source: Bloomberg, Mortgage Bankers Association
Seasonality for the CBOE VIX Index shows that volatility usually rises during the summer and early fall months amid thin market liquidity during the holiday season. The S&P 500 is now entering its period of the worst historical returns, with August and September averaging declines of 0.6% and 0.7%, respectively, over the past 25 years. With rising US-China tensions, earnings estimates cuts, recession risks and uncertainty around the Federal Reserve’s path, the US stock market faces plenty of headwinds.
Source: Bloomberg