S&P 500 Heads Towards The 4000 Level As Treasury Yields Decline

Key Insights

  • Lower Treasury yields and weaker dollar provided significant support to stocks. 
  • Energy and basic materials stocks led the rebound. 
  • Best Buy rallied after beating analyst estimates. 

Energy Stocks Rebound As WTI Oil Moves Towards The $82 Level

S&P 500 moved towards the 4000 level as energy stocks rebounded after yesterday’s pullback. Marathon Petroleum, APA Corporation, and Hess Corporation were up by 5% in today’s trading session.

Basic materials stocks, including the copper producer Freeport-McMoRan and the fertilizer producer Mosaic, have also gained strong upside momentum today.

Best Buy was the biggest gainer in the S&P 500 today. The stock gained 11% after the retailer beat analyst estimates, raised full-year guidance and resumed its buyback program.

Meanwhile, Dollar Tree declined by 9% as traders focused on the disappointing earnings forecast.

The tech-heavy NASDAQ Composite gained 0.8% as tech stocks moved higher. Interestingly, Tesla managed to move away from yearly lows despite worries that it could cut prices in China due to weak demand.

From a big picture point of view, the rebound was broad, and all market segments managed to gain upside momentum in today’s trading session. Weaker U.S. dollar and lower Treasury yields provided material support to stocks today.

S&P 500 Tries To Get Out Of The Recent Trading Range

S&P 500

S&P 500 failed to develop downside momentum in recent trading sessions and managed to get back above the 3960 level. To continue its rebound, S&P 500 must settle above the resistance at 4000.

RSI remains in the moderate territory, so there is plenty of room to gain upside momentum in case the right catalysts emerge. However, it remains to be seen whether S&P 500 will be able to gain significant momentum ahead of Thanksgiving. Usually, many traders take a break at this time of the year, so trading volume declines.

The current setup looks bullish as S&P 500 managed to stabilize in the wide 3920 – 4000 range after the strong rally. In case S&P 500 manages to settle above the 4000 level, it will have a great chance to get to the test of the important resistance level near the recent highs at 4040. A move above this level will signal that S&P 500 is ready for a strong move.

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

S&P 500 Retreats As Traders Reduce Risks Ahead Of U.S. Inflation Reports

Key Insights

  • S&P 500 moved towards the support level at 3760 amid unclear results in U.S. elections. 
  • Traders have also paid attention to the major sell-off in crypto markets, which hurt market sentiment towards riskier assets. 
  • Energy stocks declined as WTI oil pulled back towards the $86 level.

Disney Falls As Quarterly Report Misses Estimates

S&P 500 is under strong pressure as traders evaluate the unclear results of the U.S. midterm elections and worry about the huge sell-off in crypto markets.

The sell-off is led by energy stocks, which are moving lower due to the strong pullback in oil markets. Stocks like Occidental Petroleum, Hess Corporation, and Devon Energy are down by 5-7% in today’s trading session.

Disney is down by 13% as its quarterly report missed analyst expectations. The market is also disappointed by the near-term outlook for the company’s business.

Tesla is down by 6% as traders react to Elon Musk’s sales of the stock. To raise money for his Twitter deal, Musk sold roughly $4 billion worth of Tesla stock in recent days.

NVIDIA is down by 5% as traders are worried that the sell-off in crypto markets will reduce demand for company’s products.

From a big picture point of view, the sell-off is broad, and all market segments have found themselves under material pressure.

Traders Prepare For U.S. Inflation Reports

S&P 500

Traders should keep in mind that the U.S. will release inflation data tomorrow. Analysts expect that Inflation Rate declined from 8.2% in September to 8% in October. It looks that some market participants have decided to reduce their risks ahead of this important report.

S&P 500 is currently trying to settle below the support level at 3760. In case this attempt is successful, S&P 500 will move towards the next support at 3725. A move below this level will open the way to the test of the support at 3690.

On the upside, the nearest resistance level for S&P 500 is located at 3805. If S&P 500 climbs back above this level, it will move towards the resistance at 3835. In case S&P 500 manages to settle  above 3835, it will head towards the resistance level at 3885.

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

S&P 500 Tests Resistance At 3885 As Apple Rallies

Key Insights

  • Apple’s strong performance pushed S&P 500 to multi-week highs. 
  • Amazon moved towards the $100 level after presenting weak guidance. 
  • A successful test of the resistance at 3885 will push S&P 500 towards the next resistance level at 3915.

Tech Stocks Rally As Reports From Apple And Intel Boost Sentiment

S&P 500 gained strong upside momentum and moved towards the 3885 level as Apple shares enjoyed strong support after the release of the company’s quarterly report.

Apple reported revenue of $90.1 billion and earnings of $1.29 per share, beating analyst estimates on both earnings and revenue. It looks that traders waited for an excuse to buy Apple stock as the company’s results were not too strong but the stock gained 8%.

Apple’s results offset the negative impact of the sell-off in Amazon shares, which were down by 8%. It should be noted that Amazon stock was down by as much as 19% during yesterday’s post-market session, so Apple’s results provided material support to general sentiment in the tech segment.

Intel  stock also rallied after the release of the quarterly report. In Intel’s case, traders cheered job-cut plans.

While tech stocks enjoyed broad support, energy stocks like Schlumberger, Pioneer Natural Resources and Hess pulled back as oil markets declined amid worries about coronavirus lockdowns in China. Meanwhile, the leading copper producer Freeport-McMoran was down by 2% as copper settled below the $3.45 level.

Interestingly, stronger dollar and higher Treasury yields did not put any pressure on S&P 500 today. Apple’s solid report boosted traders’ risk appetite, and market participants rushed to buy stocks from various industries.

S&P 500 Tests Multi-Week Highs

S&P 500

Currently, S&P 500 is trying to settle above the resistance level at 3885. RSI remains in the moderate territory, and there is enough room to gain additional upside momentum in the upcoming trading sessions.

In case S&P 500 settles above the 3885 level, it will head towards the next resistance at 3915. A move above 3915 will open the way to the test of the resistance at 3960. In case S&P 500 climbs above 3960, it will move towards the next resistance at 4000.

On the support side, the previous resistance level at 3835 will serve as the first support level for S&P 500. If S&P 500 manages to settle below this level, it will move towards the next support at 3805. A move below the support at 3805 will push S&P 500 towards the support at the 20 EMA at 3760.

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

S&P 500 Pulls Back As Big Tech Stocks Retreat

Key Insights

  • S&P 500 declined towards the support at 3835 as traders focused on the disappointing reports from Alphabet and Microsoft. 
  • Lower Treasury yields and weaker dollar did not provide sustainable support to stocks. 
  • Meta’s disappointing earnings report, which was released after the market close, may put more pressure on the S&P 500.

Meta Stock Tests Multi-Year Lows In The Post-Market Session

S&P 500 touched highs at the resistance at 3885 but lost momentum and moved towards the support at 3835 as it was dragged down by the leading tech names.

Alphabet was down by 9% while Microsoft lost 7% after disappointing earnings reports, which were released yesterday after the market close.

Boeing lost 8% after missing analyst estimates and recording an additional $766 million charge on the contract for two new U.S. presidential airplanes.

The negative impact of the disappointing reports from the leading tech companies offset the positive impact of lower Treasury yields and weaker U.S. dollar. The yield of 10-year Treasuries made an attempt to settle back below the 4.00% level as traders bet that the Fed may be forced to be less hawkish.

It should be noted that the Bank of Canada has already decided that aggressive rate hikes were putting too much pressure on the economy and raised the rate by 50 bps, compared to analyst forecast of 75 bps. This move provided some support to global markets.

While leading tech stocks found themselves under pressure, energy stocks like Hess, Halliburton, ConocoPhillips and others were moving higher amid a strong rebound in the oil markets.

In the post-market session, traders focused on Meta‘s quarterly report. Meta reported revenue of $27.71 billion and earnings of $1.64 per share, beating analyst estimates on revenue and missing them on earnings. The company noted that ad impressions increased by 17% year-over-year, while the average price per ad declined by 18%. Revenue declined by 4% on a year-over-year basis. Traders did not like the report, and Meta is down by 12% in the post-market session. Meta’s results may have a material negative impact on market’s mood tomorrow.

Ford reported revenue of $39.4 billion and a loss of $0.21 per share. The loss was driven by the $2.7 billion non-cash impairment of Ford’s investment in Argo AI, which was developing L4 advanced driver assistance systems. Ford’s results were also impacted by supply shortages and higher-than-expected supplier payments. The stock was down by about 1% in the post-market session.

S&P 500 Faced Strong Resistance At 3885

S&P 500

S&P 500 failed to settle above the resistance at 3885 and declined towards the support level at 3835. In case S&P 500 settles below this level, it will head towards the support at 3805, although it should also get some support at the 50 EMA at 3815. A move below the support at 3805 will open the way to the test of the next support at 3760.

On the upside, S&P 500 needs to settle above the resistance at 3885 to continue its rebound. The next resistance level for S&P 500 is located at 3915. If S&P 500 climbs above this level, it will head towards the resistance at 3960.

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

Hurricane Ian Spells Trouble for the Fed and Its Inflation Goals

Today, the US State of Florida woke up to the devastation of Hurricane Ian. As residents of the worst-hit parts make the journey home, residents and businesses will begin to assess the financial impact of a storm that peaked at a category four before heading back out to sea.

With parts of the State of Florida still under water and facing high winds and heavy rain, news media outlets report that more than two and a half million are without electricity.

President Joe Biden declared a major disaster, releasing federal-level disaster relief funds to help the State tackle the destruction.

While businesses in the path of Hurricane Ian will face the battle of rebuilding, there will be the indirect effects of the storm on some of the country’s largest multinationals.

Supply Chain Disruption, Fuel Prices, and Inflation

One immediate effect of Hurricane Ian will be on supply chains in and out of Florida.

Across the State, fuel terminals are closed, with oil companies evacuating employees ahead of the storm’s arrival. As reported by Reuters, BP Plc (BP), Chevron Corp (CVX), Occidental Petroleum Corp. (OXY), and Hess Corp (HES) shut down operations in the State.

In the aftermath of the storm, infrastructure is an issue. Reportedly, fuel trucks can’t reach affected parts of the State, with lengthy waiting times likely to impact businesses reliant upon diesel-fueled generators. Shortage concerns were significant enough for the White House to issue a warning to Oil Companies. President Biden reportedly said,

“Do not – let me repeat, do not, do not – use this as an excuse to raise gasoline prices in America.”

According to the US Joint Economic Committee, gasoline prices surged by 46 cents a gallon immediately after Katrina. The JEC noted that ‘some consumers paid almost twice what they paid the year before.’ Higher gasoline prices would spell more trouble for the US economy and the FED grappling with inflation.

Elevated prices would extend beyond the pump, with businesses having to pass on running costs to consumers. The JEC report noted that ‘fuel prices increased quickly after the supply disruption. However, the JEC also observed that prices decreased more slowly after capacity was restored.’

One other area of interest is the Sunshine State’s citrus industry. According to a CNN report, Ian threatened 75% of the citrus belt with heavy rain and floods. With citrus production reportedly under pressure ahead of the storm, supply shortages would lead to higher food prices, another headache for consumers and for the Fed.

Retailers and the Services Sector Likely to Bear the Brunt of the Pain

Reuters reported that Amazon.com (AMZN) paused operations in some sites, with Walmart (WMT) and Sam Clubs closing down more than 100 stores. Walt Disney (DIS) also shut down theme and water parks on Wednesday and Thursday.

With food and fuel prices keeping US inflation at four-decade highs, retailers will likely add to the inflation problem. As water levels decline, supply issues, and strong demand, will drive prices higher.

While the global equity markets may not have reacted to news updates from the State of Florida, the impact may be evident in the months ahead. Florida is among the top five US states by GDP, with a GDP equivalent to Mexico.

US Equity Markets Tumble as Inflation and Economic Woes Hit Sentiment

At the time of writing, the Dow and the S&P 500 were down 1.64% and 1.88%, respectively, with the NASDAQ 100 sliding by 3.01%.

Amazon.com was down 3.34%, with Disney and Walmart seeing losses of 1.73% and 0.50%, respectively. Oil companies were also in the red, with Chevron down 1.41% and BP PLC falling by 1.28%.

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.

S&P 500 (SPY) Remains Under Pressure At The Start Of The Week

Key Insights

  • The stock market is falling as traders sell riskier assets amid recession worries.
  • Strong dollar and rising Treasury yields serve as additional bearish catalysts for stocks. 
  • The pullback is broad, and all market segments are under pressure. 

S&P 500 Retreats As U.S. Dollar Tests New Highs

S&P 500 continues its attempts to settle below the support level at 3660 as traders move out of riskier assets.

Treasury yields are testing new highs. Currently, the yield of 10-year Treasuries is trying to settle above the 3.85% level. At the start of August, 10-year Treasuries yielded just 2.60%, so the recent upside move was huge.

Higher Treasury yields put significant pressure on REITs. Kimco Realty, Ventas, Prologis, and Vornado Realty are among the biggest losers in the S&P 500 today.

Energy stocks have also found themselves under pressure as WTI oil tested new lows. Baker Hughes, Hess, and Halliburton are down by more than 3% in today’s trading session.

Some tech stocks, like Apple and Amazon, are trying to rebound today. Other tech stocks, which have been weak in recent weeks, continue to move lower. Meta and NVIDIA are testing new lows.

It should be noted that strong dollar also serves as a negative catalyst for U.S. stocks by making them more expensive for foreign investors. Today, the U.S. Dollar Index tested highs that were last seen back in 2002. Dollar’s strength highlights the global flight to safety, which is bearish for riskier assets like stocks.

S&P 500 Tries To Settle Below The Support Level At 3660

S&P 500

From a technical point of view, RSI has recently entered into the oversold territory, so the risks of a rebound are increasing. This year, RSI has been at current levels in late January, after the strong pullback.

This time, the panic looks strong, so RSI may move to lower levels without a rebound. It remains to be seen whether the market is ready for a flash sell-off, which happened during the coronavirus crisis. However, the current pullback is broad, and the recent moves in currency markets show that investors are very nervous.

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

Hess Shares Soar After Blowout Quarterly Earnings; Target Price $86

Hess Corporation, an independent oil & gas exploration and production company, reported earnings way above what Wall Street had expected for the first quarter of 2021, sending its shares up over 7% on Wednesday.

The energy company said its net income was $252 million, or $0.82 per common share, compared with a net loss of $2,433 million, or $8.00 per common share in the first quarter of 2020. That was more than double the market expectations of $0.36 per share.

Following this, Hess shares surged as much as 7.7% to $75.93 on Wednesday.

However, Hess cut its forecasts for net production, excluding Libya, to be 290,000 boepd to 295,000 boepd from previous guidance of nearly 310,000 boepd.

Analyst Comments

HES beat 1Q EBITDAX estimates by 25% owing to abberationally higher pricing from February’s polar vortex. Oil ex-Libya missed by 1% on weather-related impacts in the Bakken though capex was 31% below consensus. FY capex was maintained at $1.9bn but production guidance was lowered by 6% largely due to NGL POP accounting in the Bakken. We expect a largely neutral response to the print,” noted David Deckelbaum, equity analyst at Cowen.

Hess Corp Stock Price Forecast

Ten analysts who offered stock ratings for Hess Corp in the last three months forecast the average price in 12 months of $86.78 with a high forecast of $110.00 and a low forecast of $73.00.

The average price target represents a 14.50% increase from the last price of $75.79. Of those 10 analysts, nine rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $82 with a high of $121 under a bull scenario and $41 under the worst-case scenario. The firm gave an “Overweight” rating on the oil & gas exploration and production company’s stock.

“Differentiated rate of change story underpinned by highly economic, long-cycle growth in Guyana balanced by short-cycle optionality in the Bakken. As Guyana production comes online HES‘ breakeven oil price is set to fall from over $70/bbl in 2019 to <$40/bbl by 2025,” noted Devin McDermott, equity analyst at Morgan Stanley.

“Guyana – underappreciated “crown jewel” asset. Guyana asset offers high return economics and underappreciated upside potential as management derisks future development. Rapid payback contract structure puts economics on par to better than most conventional and unconventional developments. Bakken also offers upside. Management’s Bakken target appears conservative as the company shifts to a new completion design.”

Several other analysts have also updated their stock outlook. Raymond James lowered the target price to $90 from $92. Cowen and company lifted the target price to $73 from $60. Susquehanna upped the price target to $83 from $72.

Moreover, CFRA increased the target price to $72. Scotiabank raised the target price to $75 from $71. Credit Suisse lifted the price target to $70 from $58. JP Morgan upped the price target to $80 from $69.

Check out FX Empire’s earnings calendar