Cross markets provide support for equities, which are higher and near best levels with the S&P 500 on track for a 3% weekly gain.
Crude prices in focus as US equities are narrowly mixed, with Energy, Industrials and Financials upside standouts.
US equities are mostly lower with Health Care, Energy and Materials outperforming, while Communication Services (GOOGL) and Tech (MSFT) retreat. Treasury yields are lower with curve flattening.
Terminal Fed rate expectations (implied in the OIS forward curve) have been the dominant driver for equities since April/May.
According to the latest Zillow update, home sales in September fell -18% MoM with a sharp deceleration in activity at the end of the month when mortgage rates were at highest levels. or equities since April/May.
The S&P 500 (SPX) has rallied ~4% off the lows through yesterday’s close, but the buyers are likely higher. There doesn’t seem to be a shortage of skepticism for the recent bounce, which keeps the pain trade skewed to the upside.
The near-term technical resistance hurdle for the S&P 500 remains 3690 with the index currently above that level intraday.
We discuss SPX outlook as equities rebound following improved UK sentiment.
The sharp reversal in equity markets follows details that reveal the elevated CPI print came largely from stickier components like Owner’s Equivalent Rent.
Consensus is looking for headline CPI to come in at +8.1%. Anything north of +8.1% will likely weigh on the SPX with Tech underperforming.