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Market Insight – Is a robust Relief Rally on the cards for S&P 500?

Market Insight – May 11th, 2022.
• Is a robust Relief Rally on the cards for S&P 500?
• Sell-off eased a bit while markets wait for inflation data.

Market Insight – May 11th, 2022.

  • Is a robust Relief Rally on the cards for S&P 500?
  • Sell-off eased a bit while markets waited for inflation data.

S&P 500

S&P 500 tumbled down to touch the 3960 level yesterday to recover back to 4001 points later. The heavy sell-off that got triggered on the 30th of March. It has seen markets struggling to find reasonable support on the chart. High inflation, rising interest rates, the Russia - Ukraine War, and slowing economic growth all contributed to creating fear amongst the investors. The selloff seems to have eased a bit in yesterday’s session. The index touched the 3960 level. And it later climbed back to 4001 points a gain of about 9.81 points or 0.25% at the time of closing. Tech heavy Nasdaq jumped 0.98%, DOW Jones was down by 0.26% and the VIX Volatility index eased a bit too as it dropped down to 32.99 points as investors stay cautious of buying back just as the markets waited for the inflation data today.

Markets have been quite volatile across all asset classes. Because fears prevailed in the markets in anticipation of the slowdown in the global economic growth. Rising inflation and interest rate hike further added to investors' woes. Last week interest rates rose in the Federal Reserve of the USA to 1%, the Bank of England to 1%, and by RBA of Australia to 0.35%.

The annual inflation rate in the US jumped to 8.5% in March 2022 the highest since 1981. The markets are now waiting for the latest CPI report due today. The expectations are that the CPI could drop to 8.1% year over year, a little lower than the march data.

US Inflation chart

To contain the selloff and restore a sense of confidence in the investors the Inflation data to be published today must step down from the 8.5% record high that was witnessed in March. Many analysts expect that the March data marked the peak in inflation but the war in Ukraine is still not over, Interest rates are rising, and supply chain bottlenecks persist that could weigh on the CPI data to be published today.

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Vishal, R.

May 11, 2022

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