- Tuesday has been choppy so far, but as the end of the session approaches, indices have moved back into positive territory.
- The S&P 500 has risen to 4,535, up 0.4% more on the day, from previous session lows near 4,480.
- Analysts attributed a combination of buying dips and covering short positions as the driver of the day’s gains.
So far, Tuesday has been a choppy session for US equity markets, but as the end of the session approaches, the major indices have moved back into positive/neutral territory. The S&P 500 it recovered from the lows of 4,480 where it was down 0.7% on the day and has entered the 4,530 zone where it was up 0.4% more on the day. Having dipped as much as 1.2% earlier in the day, the Nasdaq 100 Index has moved sideways again, although it remains unable to break above the key psychological level of 15,000. Finally, the Dow is the best of the day, up just over 0.5% and back above the 35,000 level.
Analysts attributed a combination of buying dips and covering short positions as the driver of the day’s gains. “Part of the rally is explained by dip buying by those who believe stocks bottomed out as a result of aggressive Fed pricing across the market,” analysts at Swissquote explained. “Part of this is explained by short covering, which caused traders to repurchase stocks they initially bet against to close their positions,” they continued. Tuesday’s gains mean the S&P 500 is now more than 7.0% above last Monday’s low near 4,200, meaning the index has recovered almost half of the decline from its all-time highs recorded earlier in the year. .
Tuesday’s data (ISM Manufacturing and JOLT), while an interesting read, did not move the markets. The former showed the PMI fell to its lowest level since November 2020 as the Ómicron spread hampered manufacturing output growth, while the latter showed labor demand remains very strong, with almost 11 million of jobs available at the end of 2021.
Other event risks to watch this week are related to earnings; Google parent company Alphabet is posting earnings after the closing bell ahead of earnings from tech giants Apple and Meta Platforms (Facebook) later in the week. Earnings in the S&P 500 so far have been largely positive and supportive of market confidence. According to Reuters, of the 184 S&P 500 companies reported so far, 78.8% have beaten analysts’ earnings forecasts.
Additional technical levels
Source: Fx Street
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