All the major US indices ended Monday’s session up over 1%, managing a last-minute bounce ahead of today’s month-end. In fact, the upside momentum has continued in early trade this morning, before giving back gains ahead of the US open.
US indices later recovered their poise, although they don’t look as if they’ll manage to put much of a dent in their October losses. In fact, any gains will do little to counter the sell-off which has taken place since the summer. The Dow, S&P 500 and Nasdaq 100 are all on course for their third consecutive month of losses – their worst run since the pandemic sell-off in March 2020. At least yesterday’s move was enough to take both the Nasdaq and S&P out of correction territory – just.
Focusing on the S&P, at the end of last week the index held and bounced off 4,100 – a level which must now be considered a serious level of support. But in a neat symmetry, the bulls are now watching 4,200 closely and hoping that the index can not only break above this level, but then hold it on any pull-backs. If so, that will help boost sentiment and increase the probability of a rally into the year-end. But it seems likely that we’ll also need to see a significant pull-back in bond yields to persuade investors that it’s safe to increase their stock market exposure.
With the US Federal Reserve rate decision and the subsequent press conference from Chair Jerome Powell tomorrow, Apple’s results on Thursday, and Non-Farm Payrolls on Friday, there’s plenty of risk events this week to keep longer-term investors’ fingers away from the ‘Buy’ button.