S&P 500

S&P 500 (SPY) Rallies As Dollar Pulls Back From Highs

Key Insights

  • Weaker dollar and lower Treasury yields provided significant support to stocks today. 
  • Energy stocks enjoyed support amid a strong rebound in the oil market. 
  • A move above 3700 will push S&P 500 towards the resistance at 3725.

Stocks Rebound After Sell-Off

S&P 500 gained strong upside momentum and moved towards the 3700 level as traders rushed to buy oversold stocks.

The U.S. Dollar Index touched highs near 114.50 but lost momentum and pulled back towards the 113 level, providing material support to stocks.

Treasury yields have also moved lower. The yield of 10-year Treasuries declined from 4.00% to 3.75%, while the yield of 2-year Treasuries moved from 4.30% to 4.15%. Lower Treasury yields served as an additional positive catalyst for stocks.

The rebound is broad, which is not surprising as S&P 500 was oversold. Energy stocks enjoy strong support as WTI oil moved back above the $80 level. Marathon Petroleum, Hess, and Valero Energy are up by more than 4% in today’s trading session.

Basic materials stocks have also moved higher amid a broad rebound in commodity markets. The leading gold producer Newmont gained more than 3%, while copper producer Freeport-McMoRan is up by more than 2%.

Biogen gained 38% after the company revealed that its Alzheimer’s drug lecanemab was successful in a late-stage trial. Eli Lilly, which also develops a similar drug, is up by 8% today.

From a big picture point of view, traders will likely stay focused on the dynamics of U.S. dollar and Treasury yields. Demand for the U.S. dollar highlights the dynamics of demand for safe-haven assets. In case the U.S. dollar continues to move lower, stocks will get more support.

S&P 500 Tests Resistance At 3700

S&P 500

S&P 500 is currently trying to settle above the resistance at 3700. In case this attempt is successful, it will move towards the next resistance, which is located at 3725. A move above 3725 will push S&P 500 towards the resistance at 3750. If S&P 500 manages to settle above this level, it will head towards the resistance at 3780.

On the support side, a move below 3700 will open the way to the test of the support at 3660. If S&P 500 declines below this level, it will head towards the next support level at 3635. A successful test of this level will push S&P 500 towards the support at 3600.

For a look at all of today’s economic events, check out our economic calendar.