SPDR S&P 500 ETF Trust (SPY) Stock News and Forecast: Where next for SPY?
- S&P 500 rises strongly on hopes for a diplomatic solution to Russia-Ukraine.
- High growth and retail stocks outperform value as they play catch up.
- The macroeconomic backdrop remains challenging as yields remain elevated.
The main US indices, indeed most global indices, closed up on Tuesday as investors reacted positively to news reports that Russia had returned some troops to its bases. This allowed risker assets to recover, while traditional safe havens like the dollar and gold lost some ground. The S&P 500 (SPY) closed up 1.5%, The Dow closed higher by 1.3% while the Nasdaq was the top performer with a gain of 2.5% on Tuesday.
S&P 500 Stock News
The top sector on Tuesday was obviously technology with the XLK Technology ETF gaining 2.6%, while the energy sector (XLE) lagged, losing 1.05%. This was understandable as oil dropped on a reduction in Russia-Ukraine tensions. The market may have had a strong risk-on rally yesterday, but the macro backdrop remains the same.
Tuesday's PPI data will only have reinforced recent moves in fixed-income markets, and increased central bank tightening and higher yields remain the main macro factors at play. This may make any rallies such as that seen yesterday difficult to maintain. In such an environment choppy trading is likely with elevated volatility. This heightened volatility is also the result of the multitude of Russia-Ukraine headlines.
The main data set today is US retail sales. These will need to show continued health from the US consumer and avoid any thoughts of stagflation or recession. Longer-term investors should note the US yield curve, which has been continuously flattening. The yield curve has a near 100% record in predicting US recessions going back 50 years.
S&P 500 Stock Forecast
As mentioned, our key medium-term pivots are $458 and $428. In between, we have choppy and volatile trading.
SPY chart, daily
What is more interesting from a swing trading perspective is the tiny range we had yesterday in the S&P 500 (SPY). The SPY merely gapped up on the open and did very little else for the day. This shows a lack of conviction in our view on the part of bulls. For today then, $443 is key. A break below is bearish in our view and should lead to a test of weekly lows at $435.
SPY chart, 15-minute
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Author
Ivan Brian
FXStreet
Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.
