S&P 500 recovers above 4,500 in dovish trading as investors assess incoming earnings/US data.

• The S&P 500 enjoyed a modest rally above 4,500 on Monday.
• US data and earnings will be in the spotlight this week after earnings from Big Tech drove big market swings last week.

If the US data triggers a further revision of the Fed’s aggressive betting prices, there is a risk of further decline, particularly for growth/tech names.
US stock markets have erased pre-market losses to trade modestly higher early in the trading session on Monday. That means the S&P 500, up around 0.25%, has been able to climb back above 4,500, although it has so far traded within tight ranges as investors assess incoming US data and valuations. Fed statement. The Nasdaq 100 Index was up 0.8% and to the 14.7500 zone, while the Dow Jones is flat but remains decently supported above the 35,000 mark.

In terms of top stories, shares of Pelaton, which fell more than 75% over the year as the global economy reopened, hurting demand for home exercise equipment, rose more than 20 % Monday. Amazon and Nike are reportedly interested in buying the company. Otherwise, there aren’t many other major US stock market stories to update. Major gains in focus this week include Nike and Pfizer, while traders will continue to digest big tech’s gains from last week.

Remember that Facebook’s negative earnings on Thursday came to a halt and partially reversed what had previously been a very strong and broad stock market rally on the week, with the company’s shares now almost 30% below levels prior to earnings. As far as the broader stock market is concerned, Amazon’s strong earnings, up more than 16% from previous earnings levels, saved the day or week. The S&P 500 managed to end the week with 1.5% growth.

This week will be a key test of whether the first week of February was a bounce from the dead cat or the start of a more significant recovery towards all-time highs after January’s over 5.0% retracement. The same Fed tightening concerns that prompted the January slide remain high and at the forefront of investors’ minds in the wake of strong US labor market numbers last week and ahead of the US consumer price inflation data this week.

If upcoming inflation numbers further boost already lofty expectations of a 50bp hike by the Fed in March, that spells downside risk for growth/big tech names. Last Friday’s lows in the 4,450 balance area are a clear support level to watch on the downside, and any break below could open the selling floodgates for a move back towards support in the 4,300 area.

Technical levels