July 7, 2023
The S&P 500 (SPX) decelerates on its approach to technical resistance in the 4515-4535 range as the rally shows signs of exhaustion. However, there are no signs yet of bearish momentum divergence, and the bullish trend remains intact at closing levels north of 4275. The rally extension from late May followed a string of improved US growth data, which also drove Fed rate expectations and short-term bond yields higher. Fed expectations and bond yields have been the single biggest factor to explain US equity performance since November 2021. The uncoupling of equity performance and Fed expectations won’t continue much longer with Wednesday’s release of June CPI as the next major catalyst.