S&P 500: The S&P 500 retests 4,115 as the market prices in a 25 bps rate hike at the May 3 FOMC meeting
The S&P 500 pulled back from its trendline resistance on Thursday after the Fed's Mester, a non-voting member of the FOMC, said she sees the policy rate to move above 5% and expects a "soft landing" for the U.S. economy.
Both the U.S. Services and Manufacturing PMI came in on Friday above 50, beating Wall Street's consensus estimates. The latest Atlanta Fed US Q1 2023 GDP forecast stood at 2.5% as of April 18. The data suggests that the long awaited recession might not happen anytime soon.
As a matter of fact, the past three recessions occurred after the U.S. 2 year treasury yield crossed under its 600-day EMA. The spread between the U.S. 2 year treasury yield and its 600-day EMA is 1.59% as of Friday.
In our view, the big tech earnings releases in the next two weeks will determine whether or not the S&P 500 will break above 4,200.