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News

Gold surges amid US-Iran deal prospects

News

Dow hits record closing high on US-Iran peace deal hopes

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Nvidia’s stock dips despite Q1 beat, strong forecast

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CAD falls versus USD following inflation data

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Gold rises as Trump postpones Iran attack

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Crude oil surges amid stalled US-Iran peace talks

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Asset Watch

Will rates ruin the S&P 500?

Tuesday, December 6, 2022

The bulls showcased their might on Dec. 2 by shrugging off robust U.S. nonfarm payrolls and their implications for a more hawkish Fed. However, with periods of high inflation often culminating with recessions, on Dec. 2 Bank of America’s Chief Investment Strategist Michael Hartnett wrote:
“Bears (like us) worry unemployment in 2023 will be as shocking to Main Street consumer sentiment as inflation in 2022. We’re selling risk rallies from here.”
On the other hand, on Nov. 30, Carson Group’s Chief Market Strategist Ryan Detrick wrote:
“This is a bear market rally they say. The S&P 500 [is] up 13.8% in 2 months…. Past 13 times (since 1950) it gained >13% over 2 months it was higher a year later 12 times and up 20.7% [on] average.”
S&P 500 Stock Chart Trading View

So, while conflicting opinions reign, could the S&P 500’s short-term fate come down to the performance of the U.S. 10-year Treasury yield?

The blue line shows how the S&P 500 closed above its 200-day moving average on Dec. 2, meaning the index’s technical strength remains. But the black line shows how the inverted (down means up) U.S. 10-Year Treasury yield has largely decided the S&P 500’s direction in 2022. In a nutshell: when interest rates decline, the S&P 500 rises.

Therefore, with the black line rising as interest rates fall, the S&P 500 has continued its positive response. Will the good times last, or is another rate rise on the horizon?


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