S&P 500 Facing Major Test Above As Stocks Close A Bullish Month
Skerdian Meta • 2 min read
Stock markets turned bullish at the end of March, overcoming many worries, such as concerns over recession, inflation, and bank panic, which had a great impact on market sentiment. Despite this, the S&P 500 ended up 7% higher, and the Nasdaq saw a 16% increase.
Last Friday, the market bias towards risk assets was evident, helped by a softer PCE inflation report from the US. However, the USD remained broadly strong, with only the Canadian dollar outperforming it. The Euro weakened as the ECB’s Villeroy downplayed the outlook for significantly more rate hikes, and flow-driven trade was also a factor.
Late-day comments from Fed officials were largely ignored, as the market awaits the same data as the FOMC. The pricing suggests a 50/50 chance of a rate hike in May, but there is limited scope for hiking after that meeting. This is positive news for risk trades such as stock markets and S&P 500 is looking like it is about to form a bullish reversal, after the bearish period since 2021 as inflation started to increase.