The S&P 500 retreats lower from highs of 3,587, trim daily gains as the market digests strong US data.

• The S & P500 has eroded all of its previous gains amid choppy trading after the strong US PMI data.
• As markets weigh whether strong data can deter the Fed from acting, the S&P 500 is trading within recent ranges.

The US stock markets have been oscillating in recent trading, with the S&P 500 initially rebounding after the US session opening at 14:30 GMT, then seeing further momentum to its highest levels since last Wednesday on the back of strong data. , and send the index back to last week’s lows at 3550 and turn lower.

S&P 500 hit by vaccine optimism, US-China tensions, and differing views on strong US data.

S&P 500 futures spent most of their pre-US market trade on green, driven primarily by increasingly optimistic sentiment regarding the prospect of a global economic recovery in 2021 in the wake of some good news about vaccines.

AstraZeneca released an update on Monday, announcing that its vaccine has an average efficacy of 70% (slightly lower than the Pfizer and Moderna vaccine), although a regiment of vaccine candidates, those who received a half dose followed by a second dose completed a month later, he saw an average efficiency of 90%.

Importantly, storage conditions are more favorable than the Pfizer vaccine; This vaccine can be stored under normal refrigerator conditions for at least six months (compared to Pfizer’s vaccine, which should be stored at -70 degrees Celsius, and Moderna’s, which can be stored in refrigerator temperature for only one month ).

S&P 500 futures took a small hit ahead of the US opening on news that the Trump administration is pushing for new hard-line measures against China to prevent them from employing economic coercion.

According to senior officials, they want to create an informal alliance of Western nations to jointly retaliate when China uses its trade power to coerce countries and was motivated by the economic pressure China has been putting on Australia after the country called for an investigation. independent in the origins of the Covid-19 pandemic.

However, S&P 500 futures managed to maintain reasonable gains on the day heading to the Markit PMI release, which was normally not very followed at 14:45 GMT.

However, Monday’s US PMI Markit release was different, prompting a huge market reaction, particularly in currency markets; Given how robust the data itself was, as well as the fact that it showed US inflation starting to skyrocket in November, the USD has seen an impressive rally, with the dollar index jumping from around 92.00 to more than 92.50.

Over the same time frame, the S&P 500 has ranged from initial post-data gains (given the strong data driving optimism about future earnings) to trading flat again on the day.

Given the reaction in USD, it appears that markets are considering that strong data and the prospect of higher-than-anticipated inflation in 2021 could set the stage for a less accommodative-than-expected Federal Reserve, something that is being taken as a negative stock market valuation.

The S&P 500 continues to trade within recent intraday ranges

The S&P 500 continues to trade within a range of roughly 3543-3583. If the bears prevail and send the index below last Thursday and Friday lows around 3543, the door would open for a retest of the 3510-3520 area, which acted as significant support / resistance from Nov 5-11. . Conversely, if the bulls were to prevail and push the S&P 500 higher, resistance at the 3600 psychological mark would be important, as would the start of last week’s highs around 3620-3630.

4 hour chart