- S&P 500 (SPY) closes positively on Wednesday as global equities recover losses.
- Facebook (FB) earnings after the close help S7P 500 futures to continue gaining.
- S&P 500 (SPY) and Dow Jones close higher but Nasdaq still finished Wednesday in the red.
Global stock markets began to recover on Wednesday after taking a strong battering on Tuesday. The move was not unsurprising from a technical perspective. Also helping were bond markets seeing some correction from recent moves which helped yields to fall. By the close Energy (XLE), Communications (XLC) and Materials (XLB) were all up 1.4% while Real Estate (XLRE) and Utilities (XLU) were the worst-performing sectors. No surprise that we saw some corrections to recent sector performance. The VIX volatility index also tracked lower back below 30 to 29.51 while bond market volatility also fell slightly to 130 but it still remains elevated despite the Fed hawks being in the blackout phase, before their May interest rate decision.
Bond market volatility (MOVE) versus VIX
S&P 500 (SPY) news
Facebook (FB) really started the after-hours rally in the futures market as FB stock gained a quickfire 15-20% after releasing earnings. It is not like the earnings were particularly good, rather it was a relief rally after the terrible earnings last time out and the subsequent record market cap fall for Facebook. Next up we have a make-or-break release from Apple (AAPL) and Amazon (AMZN) after the close. Later today we get a first look at US GDP for Q1 and it is likely to show the US economy barely registering any economic growth for the quarter. Deutsche Bank published its investor survey this week and 60% of respondents expect a US recession in 2023. We tend to agree with this assessment, despite the fact that equity investors are hoping otherwise. The FX and bond markets are usually more accurate and the safe haven flows into bonds and the dollar are telling.
S&P 500 (SPY) forecast
It can’t be all bad news though and Wednesday’s price action especially in the after-hours with the futures sets up the strong possibility of a bear market rally. We say bear market as the S&P is down nearly 8% for April so far. But technically we have potentially put in a double bottom at $415. If equities can get through this week unscathed then a rally is more likely. Apple and Amazon though will set the tone after hours on Thursday.
S&P 500 (SPY) chart, daily
The author is long Facebook and short Tesla