S&P 500 Retreats From Session Highs As Energy Stocks Pull Back

Key Insights

• Energy stocks are under pressure as WTI oil settled below the $89 level. 
• Take-Two Interactive declined by 15% as traders reacted to the disappointing earnings report. 
• A successful test of the support at 3805 will push S&P 500 towards the support level at 3760.

Energy Stocks Decline Amid A Sell-Off In Oil Markets

S&P 500 pulled back from session highs as energy stocks moved lower due to the sell-off in oil markets. The tech-heavy NASDAQ Composite has also found itself under material pressure in recent hours.

WTI oil has declined below the $89 level as traders remained disappointed that China did not relax its zero-COVID policy. This move was bearish for energy stocks.

It should be noted that leading mega cap stocks like Microsoft, Apple, Amazon and Tesla have been also moving lower today.

Meanwhile, basic materials stocks enjoyed strong support. Gold producer Newmont Corporation gained 6% as gold moved above the $1700 level. Copper producer Freeport-McMoRan was up by 2% as copper made an attempt to settle above the key $3.70 level.

Take-Two Interactive was down by 15% after the company reported revenue of $1.4 billion and a loss of $1.54 per share, missing analyst estimates on both earnings and revenue.

Traders will stay focused on the midterm elections, which may provide additional support to stocks. Meanwhile, the U.S. dollar and Treasury yields are moving lower, which is bullish for S&P 500.

From a big picture point of view, the lack of market enthusiasm in the mega cap stocks remains a serious problem. Former leaders like Amazon and Tesla are trading at multi-month lows, which indicates that traders’ risk appetite remains limited.

At this point, the market is mostly supported by energy and basic materials stocks. If traders focus on recession risks and energy stocks gain downside momentum, S&P 500 may move closer to yearly lows.

S&P 500 Tests Support At 3805

S&P 500 is currently trying to settle below the 3805 level. In case this attempt is successful, S&P 500 will move towards the support at 3760. A move below this level will open the way to the test of the support at 3725. In case S&P 500 gets below the support at 3725, it will head towards the next support level at 3690.

On the upside, S&P 500 needs to settle back above the 3805 level to have a chance to gain upside momentum in the near term. The next resistance level is located at 3835. If S&P 500 manages to settle above this level, it will move towards the resistance at 3885.

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