S&P 500 Gains Ground After Powell’s Comments On Inflation And The Labor Market

Key Insights

• S&P 500 gained strong upside momentum after the release of Fed Chair Powell remarks. 
• The market focused on the potential slowdown of the pace of Fed rate hikes. 
• A move above 4000 will push S&P 500 towards the resistance at 4015.

Powell’s Remarks Provided Support To Stocks

S&P 500 moved higher after the speech from Fed Chair Powell as his remarks contained no surprises.

Powell noted: “The time for moderating the pace of rate increases may come as soon as the December meeting […] It is likely that restoring price stability will require holding policy at a restrictive level for some time.”

In general, Powell said the same things as Fed speakers in their recent public statements. The Fed will have to raise interest rates to a restrictive level and then hold them at this level for some time to make sure that inflation is under control.

Markets are focused on the potential slowdown of the pace of rate hikes. It looks that traders hope that inflation will start moving lower at a robust pace, and the peak rate would not be too high.

Treasury yields moved lower after Powell’s remarks, which was bullish for tech stocks. NASDAQ Composite gained strong upside momentum and made an attempt to settle above the 11,150 level. Tesla, Meta, NVIDIA, Alphabet, and Microsoft were up by more than 2% in today’s trading session.

S&P 500 Is Moving Towards The 4000 Level

S&P 500 moved above the 3960 level after Powell’s remarks. RSI is in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge. The next resistance level for S&P 500 is located at 4000. A move above this level will push S&P 500 towards the 4015 level. If S&P 500 gets above 4015, it will head towards the resistance at 4040.

On the support side, the previous resistance at 3960 will serve as the first support level for S&P 500. If S&P 500 gets back below 3960, it will head towards the support at 3920. A successful test of this level will push S&P 500 towards the next support near the 50 EMA at 3885.

For a look at all of today’s economic events, check out our economic calendar.