Today's trading brings a potential reprieve after yesterday's sharp decline - but is it sustainable?
The market experienced a pullback yesterday, with the S&P 500 dropping 2.24% after Fed Chair Powell delivered a surprisingly hawkish speech, citing inflation concerns related to new tariffs. However, sentiment has improved this morning amid optimism about trade negotiations and corporate earnings releases.
Investor sentiment has slightly worsened, as shown in yesterday’s AAII Investor Sentiment Survey, which reported that 25.4% of individual investors are bullish, while 56.9% of them are bearish.
The S&P 500 continues to trade below key 5,500 resistance, as we can see on the daily chart.
S&P 500 Futures Contract: Remaining Above 5,300
This morning, the S&P 500 futures contract is trading 0.4% higher, after rebounding from its yesterday’s low of 5,251.
Key support remains around 5,300, marked by the recent fluctuations. Resistance is around 5,400.
Last Wednesday, I noted that “The contract may be forming a double-bottom pattern, though it's too early to confirm.” This proved correct.
Conclusion
The stock market is finding some footing after Wednesday's sharp decline, with tech stocks leading a potential rebound. While uncertainty remains about whether we're seeing a new leg of the downtrend or just a correction, the upcoming long holiday weekend may help stabilize market sentiment.
Earnings season kicked into high gear this week, with TSMC reporting earlier today. Taiwan Semiconductor Manufacturing posted a 60% surge in first-quarter profit, projecting higher revenue on strong AI chip demand. This is pushing tech stocks higher, partially offsetting yesterday's Nvidia-led decline. However, UnitedHealth (UNH) numbers led to a 20% pullback in its stock price, pushing futures down. Investors will be waiting for the Netflix (NFLX) release after the session closes.
The market continues to be highly sensitive to trade policy developments, and volatility is likely to persist.
Here’s the breakdown:
- Market broke lower after Monday-Tuesday stabilization.
- S&P 500 is expected to open 0.4% higher today, boosted by TSMC's strong earnings despite UNH's 20% selloff.
- It is still a news-driven market, with tariff developments in focus.
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