- SPY still struggles in the face of rising bond yields.
- Earnings season is holding up, but some notable stocks suffer.
- Apple will be the biggest hurdle for earnings season.
Stocks continue to suffer as bond yields keep pushing higher. The futures markets are now pricing in the Fed peaking at 5% as inflation globally continues to pick up and hawkish talk from central bankers underpins the move. Oil is not helping as the OPEC+ supply cut started things going, and now we have a Biden administration put due to talk about refilling reserves at around 70 dollars. More talk of China’s covid restrictions is not helping either.
Semiconductors were one of the better-performing sectors on Thursday with the SMH ETF up nearly 1%. Also higher were energy, tech and miners, although the gains were small. Transports continue to suffer from rising gas prices and were one of the bigger fallers. Overnight we had another shocker from Snap (SNAP) stock, which is now down 26% in the premarket and has dragged Meta Platforms (META) with it, down 4% currently.
Already futures and European markets are lower this morning, while bond yields hold Thursday’s gains. Bond yields have been supported by increasingly hawkish comments from Fed speakers. They have one more day of speaking engagements on Friday before a blackout period ahead of the November decision.
Earnings season is what is keeping the SPY from more losses in my view. With yields spiking, it is hard to contain the bears, but so far earnings held up. Now with Tesla (TSLA) and Snap, things may get harder. The longer we remain below my pivot of $373, then the more bearish I become. With the weekend ahead, will investors look to reduce positions even further? $352 remains the lower support level, and a break there is strongly negative. I feel and could see a capitulation to $319. As I have been saying, $373 is my pivot, and SPY needs to break above it soon. That should then lead to an easy move to $389.
SPY daily chart