Wall Street Rebounded from Losing Streak

Weekly Wrap Content for the week of Sep 9:

1. Week 36 major indexes performance;

2. Week 36 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

U.S

For the holiday-shortened week ended Sep 9, U.S stocks broke a string of three weekly losses, as investors appeared to grow more confident that the market had reached at least a temporary bottom after surrendering about half of its summer rally. Some moderating inflation fears may have also been at work, and a midweek decline in oil prices—which briefly hit their lowest level since Russia’s invasion of Ukraine—caused energy shares to underperform within the S&P 500 Index, although the sector still recorded a gain. SPX rebounded and recovered all its previous weekly loss, formed a bullish weekly reversal candlestick pattern, which is an encourage sign for bulls. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Fed policy: The Fed has prioritized its credibility in bringing down inflation over an effort to support ongoing robust economic demand. Market expectation for another 75-basis-point (0.75%) hike later this month, likely to take the rate to the 3.5%-4% range as we move into 2023 then possibly pause and evaluate. 

2.    Stock market: After falling more than 20% this year, equities have mustered a solid rally, rising more than 15% from mid-June to mid-August. It’s expected we are in the midst of a bottoming process for the markets, navigating a U-shaped recovery (instead of a V-shaped rebound). 

3.    Inflation: It is noted that signs that inflation was cooling quicker than expected also seemed to support sentiment. Stocks rallied after the Wednesday afternoon release of the Fed’s “Beige Book” summarizing economic reports from its branch banks. The report indicated that price increases were moderating in nine of its 12 districts, as “lower fuel prices and cooling overall demand alleviated cost pressures, especially freight shipping rates.”

SPX sectors in play

All 11 sectors in the S&P 500 rebounded this week. A rally in heavily weighted Tesla helped the consumer discretionary(XLY) sector outperform. Energy(XLE) stocks lagged as crude oil prices declined- which briefly hit their lowest level since Russia’s invasion of Ukraine. Refer to below sector indexes weekly performance table.

Technically all three major indexes rallied after three-week losing streak, technology dominant Nasdaq composite index led the rallies with 4.1% gain.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stock markets rose as tame inflation data and expectations of further policy support prompted buying. The broad, capitalization-weighted Shanghai Composite Index(SSE weekly Chart) advanced 2.4% and the blue chip CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, added 1.7%.

Inflation cools, but so does trade and domestic demand. China’s consumer and factory gate inflation in August declined from July’s levels and came in below analysts’ expectations. Consumer prices rose 2.5% over the 12 months ended in August, while factory gate prices rose 2.5%, down sharply from 4.2% the previous month.

Hang Seng index (.HSI weekly chart) rallied on Friday and recovered nearly all its earlier losses in the week. Technically, the index has formed a weekly hammer candlestick which is a bullish reversal sign, a true reversal will only be confirmed if it continues to rebound coming week.

Singapore

STI index (STI weekly chart) also rebounded 57pts or 1.8% to 3262.95 this week. Technically, the index has recovered nearly all its previous three weeks’ losses this week. Immediate downside support at 3200- around its recent low. The index closed above all its major moving averages which is bullish.

Source: Contents/Data including information from various public market reports