S&P 500, Nasdaq 100 - Talking Points
- S&P 500[1] trades down to 50 SMA overnight before bouncing
- Nasdaq[2] 100 futures gap lower as rising wedge takes shape
- Markets continue to price in hawkish Fed following Powell’s speech
US equity markets look poised to kick off the trading week deep in negative territory, as futures markets pushed lower during the overnight session. Weakness continues to be driven by Federal Reserve Chair Jerome Powell’s comments on Friday[3], where he reaffirmed his commitment to returning inflation to target even if there is pain for US households and businesses. The Friday speech saw a nosedive in risk assets, with the S&P 500 falling more than 150 points while the Nasdaq 100 tumbled nearly 600 points. Markets have been reminded that the Fed will remain aggressive in its battle against inflation, as some complacency had creeped in following the recent CPI and PCE prints. Hopeful bets of a potential “pivot” in 2023 have been slashed following Chair Powell’s remarks.
With US Treasury yields rising across the curve, equity valuations were put under severe pressure during Friday’s session. The economically-sensitive “blue-chip” Dow Jones[4] fell more than 3%, the benchmark’s worst session since May. The S&P 500 fell 3.4% on Friday, as failed to break above 4200 in the runup to Chair Powell’s remarks. Friday was a bloodbath for a US equity market that had been holding up quite well in the face of mounting headwinds. The market had broadly shrugged off poor economic data and growing concerns about global growth, and was roughly trading flat in August following a robust July rally.
With selling having continued in the futures market following the closing bell Friday, S&P 500 futures closed right at support around
