Futures on US stock indices opened in positive territory on Thursday, but then returned to the closing level of yesterday and practically do not show any positive or negative dynamics. Most likely, the sideways dynamics of the market will continue during the regular session, as traders and investors will summarize the results of the month and quarter. Dow Jones Industrial Average futures fell 26 points or less than 0.1%. S&P 500 futures were unchanged, while Nasdaq 100 futures gained 0.2%. Historically, March is one of the best months of the year when you can watch a bullish rally, which the market has demonstrated to us.
A slight decline in oil prices against the background of the ongoing geopolitical conflict will not surprise anyone. West Texas Intermediate crude futures fell 5% to $102.18 per barrel. According to media reports, the administration of President Joe Biden is considering a plan to extract 1 million barrels of oil per day from strategic reserves for about six months. How the energy carriers will be used and for what has not yet been reported.
At the end of the month, the S&P 500 and Nasdaq can close by +5% each, while the Dow rose by almost 4% in March. But at the end of the quarter, the Dow and S&P 500 fell by about 3%, and the Nasdaq - by more than 7%.
The obvious limiter of the upward rally on the US stock market is now the Federal Reserve System with its plans to tighten monetary policy, as well as Russia's military special operations on the territory of Ukraine. Philadelphia Fed President Patrick Harker recently said he doesn't think the US is heading for a recession. As for interest rates, he is still open to a more aggressive policy in the future, but so far he is only in favor of an increase by a quarter of a percentage point in May. "I would not refuse to raise the rate by 50 basis points in May, but there is no need for that yet," Harker said.
Today, traders will focus on weekly data on applications for unemployment benefits and the personal income and expenses of Americans.
But before running through the technical picture of the market and the premarket, I would like to note an interesting report, according to which forty-six percent of respondents surveyed said that the Fed's mistake could potentially undermine the bull market. At the same time, 33 percent noted that the growth of inflation in the United States poses a serious threat. And only eleven percent called further aggression from Russia the biggest threat to the markets. Let me remind you that earlier this month the Fed decided to raise rates by 0.25 percentage points - the first increase since December 2018. The central bank has also made it clear that it will raise rates 10 times in less than two years and reduce the Fed's balance sheet, which now stands at trillions of dollars.
Premarket
Shares of some technology companies were under pressure today amid analysts' concerns about the future development of the PC market. AMD shares fell more than 2% in premarket trading after Barclays analysts downgraded their rating. Shares of HP Inc and Dell fell by 3.8% and 2%, respectively, also after the revision of their rating in Morgan Stanley.
As for the technical picture of the S&P 500
Yesterday's attempt to defend $ 4,588 was successful. It was this area that the bears stormed for the second time this week. Most likely, they will also focus on it today. Closing the market below this range will cool the ardor of buyers. Bulls, of course, will certainly try to continue the uptrend. The nearest target is the resistance of $ 4,665. Going beyond this level will open a direct path for the trading instrument to the highs: $ 4,722 and $ 4,818. In the event of a return of pressure on the index and a breakthrough of $ 4,588, we can expect a decline to the area of $ 4,539, but the longer-term target of sellers of the trading instrument will be at least $ 4,488, after which the bulls will have to start all over again.
