S&P 500 rallies as traders bet on potential FOMC pause in September

S&P 500 – Talking Points

  • S&P 500 futures rally above 4000, fail to hit last week’s highs
  • FOMC minutes reveal potential for bullish ‘pause’ later this year
  • Lower Treasury Yields, US Dollar May Allow Risk To Thrive In Short Term

The S&P 500 continues to climb after the release of the FOMC minutes yesterday, as traders continue to bet on a potential “pause” in Fed rate hikes later in the year. The risk pushed higher at the close yesterday as minutes escaped a potential “reassessment” of the tightening path after the next two FOMC policy meetings in June and July. This saw the probability of 50 basis points (bps) in September decline, while longer-term yields and the US dollar also cooled from recent highs. These flows have provided a springboard for stocks to push higher as some of the ferocity that has been priced in lately is taken off the table.

In the pre-market session, weaker-than-expected first-quarter GDP data also helped ease pressures from persistent Fed tightening this year. Thursday’s price action could help improve market sentiment as the S&P 500 and Nasdaq 100 are both on track to break 7-week losing streaks. It remains to be seen whether the bottom of this downtrend has been reached. Threats still hang over the outlook for risk assets, including inflationary shockwaves from the war in Ukraine as well as China’s continued Zero Covid policy. That being said, market participants may remain divided on the short-term direction of stocks. Many may still argue that until we have true capitulation, whether it is a VIX peak north of 40 or another day of 90% decline, the bottom may not have been reached.

S&P 500 1-Hour Futures Chart

Chart created with TradingView

Having finally breached the recent range highs at 3980, the upward compression to 4000 seemed almost inevitable. After the unwinding of a number of hawkish bets, risk continued to perform well as we approach the closing bell in New York. A previous pivot point in the 4042 area fell short today, with price rising another 30 points before running out of steam. It should be noted that the price failed to reach last week’s highs around 4095. If these highs give way to further bullish momentum, it would not be out of the question to see a compression of the 4160-range. 4200, given extreme bearish positioning and sentiment.

Resources for Forex Traders

Whether you are a beginner or an experienced trader, we have several resources available to help you; follow-up indicator trader sentimentquarterly business forecastanalytical and pedagogical webinars held daily, business guides to help you improve trading performance, and one specifically for those who are new to forex.

— Written by Brendan Fagan, Intern

Contact Brendanuse the comments section below or @BrendanFaganFX on Twitter

element inside the

element. That’s probably not what you wanted to do! Upload your application’s JavaScript bundle to the item instead.