S&P 500 recovers to 4,700 level

• The S&P 500 rallied to 4,700 on Tuesday amid a broad rally in the US stock market as the technology recovers from post-Powell comments.
• That means the index has recovered more than 2.8% from Monday’s lows below 4,600.
• The lack of aggressive new surprises seemed to give the green light for a technical reversal of recent moves.

Having managed to convincingly clear its 21-day moving average to the upside, the S&P 500 it continues to rise as the end of Tuesday’s session nears and has recently risen above the 4,700 level again. That means the index is trading around a 0.8% gain on the day and is up more than 2.8% compared to lows below 4,600 on Monday. The rally in US equities, which has been disproportionately concentrated in the recently hard-hit tech sector, was driven along with a downward reversal in US nominal and real bond yields after comments from Fed Chairman Jerome Powell. Speaking at a hearing with the Senate Banking Committee on his reappointment as Fed chairman, Powell stuck to the script and reiterated the main takeaways from last week’s hard-line Fed minutes.

Traders were apparently excited by the lack of surprises / any new aggressive rhetoric to stimulate more aggressive bets from the Fed, hence the technology-led reversal to the upside in stocks and downward in yields. Recall that long-term real and nominal returns had, prior to Tuesday, experienced a massive rally since early 2021 that had hit hard equity sectors sensitive to long-term interest, such as technology. On Monday, JP Morgan chief global markets strategist Marko Kolanovic said the recent pullback in risky assets such as US technology was “possibly overblown” and presented investors with a buying opportunity. Market participants agreed on Monday, pushing the Nasdaq 100 almost 3.0% higher from intraday lows below 15,200 to above 15,600, and the rally continued Tuesday, with the index now above 15,800. , up 1.3%.

Amid a surge in crude oil prices that has seen WTI rise more than $ 3.0 intraday to above $ 81.00 per barrel, the energy sector is up more than 3.0% on the day. Most other sectors of the US equity markets are also green, including the financial sector, despite falling US yields (10-year yields -3.5 bps to below 1.75%). The only sectors of the S&P 500 GICS in red on Tuesday are the most defensive; basic consumer goods (-0.5%), public services (-1.0%) and real estate (-0.25%). Amid broad positive performance in the US equity sectors, the Dow was up just over 0.5% on the day to the 36,250 area.

Technical levels