S&P 500 (SPX) falls as hawks circle Santa’s rally sleigh

  • Stocks fall as central banks turn hawkish and risk assets move lower.
  • Nasdaq falls over 3%, while S&P and Dow fall over 2%.
  • ECB adds to risk assets woes with an uber-hawk move.

The S&P 500 struggled along with other indices on Thursday as the penny dropped that central banks are not going to reduce their rate hikes. The ECB was notably hawkish, and rumours circulated that members wanted a 75bps hike but Lagarde had to offer a series of 50bps hikes to get an agreement. Stocks naturally fell sharply while yields rose.

S&P 500 (SPX) stock news

European markets are already weaker, but there is some positive news again on the earnings front with US Steel a notable barometer. They said commercial demand is improving. Darden Restaurants also showed the consumer continues to hold up well. With yields rising again as investors digest four central banks hiking 50bps each in the past 24 hours, stocks will struggle. Santa rally? Hmm, let’s first see if he is real!

S&P 500 (SPX) forecast

Today sees one of the biggest quadruple witchings in the past 10 years with a huge expiry. That will cause massive volumes and volatility and is likely the year’s last major event. The recent range has been 4,100 to 3,900, and we have options strikes at those levels. Direction is very hard to call into such an expiry, but IB assessments are mildly bullish. A break of 3,859 is likely to test 3,745. No strong resistance until 4,100, but sentiment again looks bearish.

SPX daily chart

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