S&P 500 rises but fails to recapture 4,600 level

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  • US stocks rose broadly on Thursday, as the PBoC’s easing buoyed global markets and amid buying on the dips.
  • The Nasdaq 100 index closed Wednesday more than 10% below its record highs from November, confirming a correction.
  • There is a lot of attention on Netflix’s earnings after the market close on Thursday.

US stocks are trading broadly higher on Thursday as equities in the zone follow gains seen in Europe and, before that, Asian markets as the PBoC on Thursday took additional steps to ease monetary policy. The Chinese central bank cut its one-year loan prime rate to 3.7% from 3.8% and its five-year loan prime rate (which is a benchmark rate for mortgages) to 4.6% from 4.65%. As a result, the S&P 500 is currently up 0.7% at 4,560, although it has pulled back considerably from the previous session’s highs of 4,600, where the index is trading up around 1.5%.

Looking across sectors of the S&P 500 GICS, gains are broad, with the big tech-dominated information technology and communications services sectors up 0.8% each, financials up 1.0%, healthcare 0.8% and industry 0.6%. The Nasdaq 100 Index is up 0.8% after bouncing from yesterday’s closing levels just above 15,000 towards the 15,200 area. Much was made of the fact that the index closed just over 10% below its November all-time high above 16,700. The buzz about the move lower from recent highs in the index, which has been driven primarily by fears of a more aggressive Fed, being an “overreaction”, and about “dip buying” is growing.

Traders have pointed to Netflix’s upcoming fourth-quarter earnings after the close on Thursday, the first for major tech companies, as a key moment for the tech sector’s near-term direction. Traders and analysts will assess whether Netflix was able to attract enough new subscribers to justify heavy spending on shows in 2022. A strong report may spur bearish buying, not just in Netflix stock, but perhaps in the entire sector. The proximity of next week’s Fed meeting suggests the scope of any post-Netflix earnings decline in the tech sector could prove quite limited.

More clarity will be needed from the Fed on its potential rate hike timeline in 2022 if the Nasdaq 100 is to recoup recent losses. Elsewhere, the Dow gained about 0.5% and the CBOE S&P 500 or VIX volatility index stabilized below the yearly highs it hit on Wednesday at 24.00, retracing marginally below 23.00.

Technical levels

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