S&P 500, Apple, Russia-Ukraine, Treasury Yields – Talking Points
- S&P 500 gives back morning gains as chop continues to prevail
- Apple beats top and bottom-line estimates, shares pop in after-hours
- Yield curve continues to flatten following yesterday’s FOMC meeting
The S&P 500 gave back premarket gains during Thursday’s session as volatility continues to reign supreme on Wall Street. Markets continue to juggle ongoing geopolitical tensions, prospects of slower growth, and most importantly, central bank tightening. After a strong rally overnight during the European session, S&P 500 futures (ES) cooled off completely to finish the session lower as the U.S. yield curve continued to flatten. Given the sheer amount of event risk on the calendar this week, it is no wonder that price continues to swing in the search for fair value.
The S&P 500 has been subject to serious chop this week, with price effectively rangebound between 4,404 and 4.260. As mentioned, 4,404 has been a solid level all week with occasional overshoots. This level has effectively capped most price action, as bulls and bears continue to duel following Wednesday’s FOMC meeting.
Crucially, price has been unable to retake the 200-day moving average at 4,426. Despite the volatile swings, Monday’s lows remain untouched at 4.212.75, perhaps a good omen for those wishing to “buy the dip.” Price managed to avoid an hourly close below 4,313 during the New York session, potentially providing support for a near-term rally on the back of Apple earnings.
S&P 500 Futures 1 Hour Chart
Chart created with TradingView
Apple Q1 Earnings Summary:
Revenues: $123.95B vs. $119.05B est.
EPS: $2.10 vs. $1.90 est.
As mentioned, markets eagerly awaited Apple’s Q1 results after the closing bell on Thursday, which blew estimates out of the water. More specifically, iPhone and Mac revenues soundly beat estimates, coming in at $71.63 billion and $10.85 billion, respectively. Resounding beats on the top and bottom lines saw shares jump 5% in after-hours, pulling S&P 500 futures toward 4,350.
Despite the buoyant after-hours session, headwinds remain for risk-assets. Geopolitical tensions could see risk appetite decline, as President Biden warned Ukrainian President Volodymyr Zelensky that a Russian invasion “is now highly certain.” Fedspeak will be returning, offering Fed members opportunities to offer more insight into the Fed’s tightening process. Finally, fears over slowing growth could creep back into markets despite Q4 US GDP data showing robust growth. The notion of aggressive Fed tightening into slowing economic growth could exacerbate recent volatility.
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— Written by Brendan Fagan, Intern
To contact Brendan, use the comments section below or @BrendanFaganFX on Twitter