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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

S&P 500 Momentum Report

A series of stronger-than-expected economic data out of the US has called for some recalibration in rate expectations over the past week

USA Source: Bloomberg

Recalibration in rate expectations failed to dampen risk rally, with eyes on big tech earnings ahead

A series of stronger-than-expected economic data out of the US has called for some recalibration in rate expectations over the past week, with market participants now being more accustomed to a potential Federal Reserve (Fed) rate cut only in May 2024 versus the initial March timeline. However, that did not stop the market bulls in their tracks, as major US indices headed for their respective record highs on renewed traction into big tech stocks.

With the Fed blackout period in place, markets are spared from any hawkish Fed comments ahead of the Fed meeting next week. Instead, market participants will be placing their spotlight on fourth-quarter (Q4) results from Netflix and Tesla to provide an early glimpse into big tech earnings. Tesla will be the first out of the "Magnificent Seven" stocks to release its earnings, and with the group driving the bulk of market returns over the past week, its results may play an important role in setting the tone for the group’s results ahead.

S&P 500 technical analysis: Back to new all-time high

A period of consolidation below the 4,800 level over the past month ended with a break in the S&P 500 to a fresh all-time high last week, as its relative strength index (RSI) on the daily chart managed to see some defending of the key 50 level from technical buyers to keep the upward trend intact. On the broader scale, an ascending channel pattern remains in place, which may leave the key psychological 5,000 level on the radar. This is where the upper channel trendline resistance may stand. On the other hand, the 4,800 level will serve as a resistance-turned-support to hold, followed by the 4,600-4,640 range.

US 500 Cash

Source: IG charts

Sector performance

Despite resilience in US economic data pushing back against dovish rate expectations last week, major US indices were unscathed, with optimism around semiconductors and big tech stocks propelling the S&P 500 to new all-time high. The guidance from Taiwan Semiconductor Manufacturing Company (TSMC) for a return to strong growth in the year ahead aided to renew confidence around artificial intelligence (AI) demand, providing the catalyst for the PHLX Semiconductor Index to push to its record high. Among the ‘Magnificent Seven’ stocks, Nvidia is the top performer (+9.0%) for the week, lifting the technology sector to the top of the performance table, along with Apple’s 4.3% gain. Google (+2.4%), Microsoft (+2.1%) and Meta (+2.0%) delivered modest gains as well, while on the other hand, Tesla (-4.6%) continues to diverge from the rest. Concerns of slowing demand and lower margins have driven some reservations ahead of its upcoming results, where greater clarification will be sought this week.

SPX sector returns: One-week and one-month

Source: Refinitiv

SPX sector returns: One-month and year-to-date

Source: Refinitiv

Sector ETFs summary

Source: Refinitiv
*Note: The data is from 16th – 22th January 2024.

Top 15 winners and losers

Source: Refinitiv
*Note: The data is from 16th – 22th January 2024.

Source: Refinitiv *Note: The data is from 16th – 22th January 2024.

Source: Refinitiv
*Note: The data is from 16th – 22th January 2024.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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