US stock index futures decreased after yesterday's second straight day of soaring gains. Traders are trying to hold on to the momentum that led the S&P 500 to its best intraday jump in three weeks. Meanwhile, investors continue to speculate whether or not the world's largest economy can avoid the worst-case scenarios of a recession next year.
S&P 500 and Nasdaq 100 futures shed 0.2% and 0.3%, respectively, after rising by 1.5% Wednesday as US consumer confidence jumped to an eight-month high. Further easing of inflation expectations also gave support to the indices, as it could result in the Federal Reserve reviewing its stance on interest rates.
Today, market sentiment was negatively affected by the weak performance of memory chipmaker Micron. The company's gloomy outlook sent its stock down during the premarket and dragged down other chipmakers. The Stoxx 600 index also declined after rising this morning, although it is still well positioned to end its two-week losing streak.
The US economy maintains its resilience and a "soft landing." is now more likely. On the other hand, the conflict in Ukraine and its impact on the energy market, inflation, and tighter monetary policy are all putting pressure on stock buyers, as these factors impact future corporate earnings significantly.
In the bond market, Japanese traders continue to dump 10-year bonds after the Bank of Japan changed its yield limit to 0.5%. This forced the regulator to conduct an additional debt purchase today, lowering the yield to about 0.385%. Still, the price of 10-year bonds is poised to make its biggest weekly jump since 2015.
US Treasury and eurozone bond yields have declined, but fears persist that Japanese investors will continue to pull billions of dollars they have invested in foreign stocks and bonds into the Japanese economy. This could further raise global debt costs and hamper the already sluggish economic growth.
Oil prices are poised to end what has been an extremely volatile year with a slight uptick. West Texas Intermediate crude oil futures are holding above $78 per barrel, continuing their upward move thanks to lower US inventories and rising consumer confidence. Copper prices, which are sensitive to growth, also rose for the fourth straight day.
On the technical side, the S&P500 may continue to rise. Defending $3,858 will be top priority for today. As long as the index remains above that level, it is likely to move steadily upwards. This will open the way to regaining $3,891, where it already lost yesterday. Just above it lies the level of $3,923. Moving beyond that level will be quite difficult. If the S&P 500 falls, bullish traders must defend $3,858 - the only remaining key level below it is $3,830, which will put downward pressure on the index. A breakout below this level would push the instrument down to $3,802 quickly, and the furthest target is around $3,773.
