Where we are: S&P 500 futures are currently trading at 7600.50, down 0.14% on the session, after a tight overnight range of 7576.50 to 7611.00. This compares to the cash close at 7600.00 yesterday, leaving the index near all-time highs despite some profit-taking in pre-market trading. A retest of the overnight low would challenge recent bullish momentum.
What’s driving it: A degree of consolidation seems to be prevailing after a strong rally. We are seeing a slight pullback in US yields, with the 10-year at 4.432% and the 2-year at 4.031%, suggesting some easing of rate-hike expectations, even as the Fed remains on hold. The DXY is relatively stable at 99.05, reflecting limited directional impetus at present. The risk tone is slightly cautious due to Middle East tensions, with geopolitical headlines overshadowing some positive earnings news.
- Speculator positioning remains moderately short the S&P 500, suggesting the possibility of a squeeze if the index continues its upward trajectory.
- HPE’s surge on an AI-fueled guidance upgrade highlights continued investor appetite for tech stocks with strong growth prospects.
- The JOLTS job openings data at 10:00 ET may provide some clues on the strength of the labor market, though the forecast is unchanged from the previous reading.
NY session focus: Traders will be watching the 10:00 ET JOLTS number for any indication of labor market cooling. Key levels to watch are 7575 as immediate support, and 7620 as resistance. The trade that’s working continues to be long tech on the AI narrative; the risk is any further escalation of US-Iran tensions impacting energy supply. The pain trade is a continued grind higher, forcing shorts to cover into record highs.