US Stock Market Recovers

Information is not investment advice

What happened?

US stocks ended sharply higher on Thursday, May 27, after a 7-week losing streak. The US500 surged 2%, and the US100 jumped 2.7%.

Retail solid earnings Thursday morning spurred markets early in the session, with such companies as Macy's, Dollar Tree (DLTR), and Dollar General (DG) raising their future forecasts.

Thursday's relief rally signals investors that despite the inflation headwinds that many companies face, consumers still have the money to spend. Moreover, a very strong labor market still underpins the overall economy. Overall, markets were hovering near oversold territory, and the rally resulted from decreasing recession fears.

Earlier, the hawkish Fed monetary policy caused investors' concerns. However, meeting minutes released on Wednesday indicated the majority of officials were strongly committed to rate hikes of 50 basis points at each of the next two meetings in June and July. So far this year, policymakers bumped short-term borrowing costs by 50 basis points earlier this month and 25 basis points in April. This information matched the investors' expectations, as the Fed sent a message they were serious about inflation without sending growth into a tailspin.

What to expect?

After the Federal Reserve increased the key rate by 0.75%, the inflation growth slowed down significantly. It signals the correctness of FOMC monetary policy, and the market feels it. If the economic data continues to please investors with its stability, the US stock market will have all chances for significant recovery, and an upcoming Amazon split only confirms it. 

Technical analysis

US100, monthly chart

US100 has been moving inside the descending channel since the beginning of 2022. In May, the price has found the local support of 11 700. Currently, the price is forming a reversal formatting right above this support level, and the FBS analytics team expects to see a significant reversal to the upside. The closest target is 13 500. However, if the price breaks out of this channel, it might reach an all-time high value.

Don't know how to trade indices?

1. First of all, be sure you’ve downloaded the FBS Trader app or Metatrader 5. FBS allows you to trade stocks only through this software.
2. Open an account in FBS Trader or the MT5 account in your personal area.
3. Start trading!

FBS Analyst Team

More by this author

Similar

01.09.2022 18:02 Worst Awaits Risk Assets in September

The Crypto market usually also has a rough time in September. Bitcoin lost 12.7% in September 2021, 17.4% in 2020, 17.5% in 2018, 21.4% in 2017 and 45.4% in 2015. The main cryptocurrency increased by 13.3% and 3.95% in 2016 and 2019, respectively.

usd s&p500

01.09.2022 14:07 Gurus Bet on Deeper Correction

What happened? Warren Buffett, the American businessman and philanthropist, has put most of Berkshire Hathaway’s cash in short-term United States Treasury bills since they offer as much as 3…

s&p500

02.08.2022 15:34 How Alibaba Deals with Troubled Times?

The e-commerce giant has recently faced a lot of pressure, starting from global uncertainty in China amid lockdowns and geopolitics. The company has been added to the US SEC (Securities and Exchange Commission) delisting queue. Finally, there’s an earnings report coming on August 4. Let’s discuss everything and prepare for the next move.

Popular

29.11.2022 11:39 CBDC: Technology of the Future or Dystopia?

Central Bank Digital Currencies (CBDCs) are virtual national money. The idea of ​​creating such currencies came to the authorities after the success of cryptocurrencies, which also exist only in digital form.

gold

21.11.2022 16:55 The Last Frontier for the USD and Gold

Suddenly, the US Dollar Index fell 6.70% over the last two weeks, marking the biggest decrease in the currency since 2020.

17.11.2022 17:56 G20: what did the leaders decide?

The G20 summit took place in Bali, Indonesia, on November 2022…