Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Wall Street: S&P 500 surges above 2022 highs; eyes on core PCE inflation, key earnings

S&P 500 surges past 2022 highs on tech and sentiment boost. Key earnings and economic events ahead signal a pivotal week for US markets.

Video poster image

After a choppy opening three weeks of 2024, the S&P 500 showed its hand on Friday night, surging above the January 2022 4818 bull market high.

Precisely two years in the making, and with a 28% pullback in between, the push to new highs was supported by the tech sector buoyed by Taiwan semiconductors' better-than-expected earnings report and a broker upgrade for Apple.

A giddy mix of data within the University of Michigan's consumer sentiment survey also helped fuel the move. Consumer sentiment in January soared to 78.8 from 69.7 in December, the largest two-month increase since the recession of 1991 ended. Notably, inflation expectations for the year ahead fell to 2.9%, the lowest since 2020 from 3.1%.

This week, the drivers of US equity markets will be earnings reports from tech giants Netflix, Tesla, and Intel Corp, along with Johnson and Johnson, Procter and Gamble, Visa and American Express. The key economic events will be Flash PMIs for January, Q4 Advanced GDP, the Fed's preferred measure of inflation, and the Core PCE price index for December. The Fed speakers' blackout period has commenced before the Fed's January meeting.

What is expected from the core PCE inflation report (Saturday, January 27th at 12.30 am AEST)?

Two months ago, annual headline PCE inflation eased to 2.6% from 2.9% prior. The Fed’s preferred measure of inflation, core PCE, cooled to 3.2% YoY, the lowest level since mid-2021, from 3.4% prior.

In December, headline PCE is expected to remain stable at 2.6% YoY and core PCE inflation is expected to fall to 3% YoY. On a six-month annualised basis, core PCE will remain at close to 2%. At 2%, monetary policy is too tight and will likely see the Fed cut rates several times in 2024.

Headline PCE price index chart

Source: TradingEconomics

S&P 500 technical analysis

After a strong rally for the S&P 500 into the end of 2023, we started the New Year in a more cautious/neutral frame of mind.

While we would not be fighting Friday night's break higher, given the risk the rally overshoots, we remain of the view that the S&P 500 is in the final stages (Wave V) of its rally from the October 2023 low and note again the bearish RSI divergence. Bearish RSI divergence occurs when prices make new highs, but the RSI fails to make a new high.

As such, we remain patient, waiting for a pullback to develop in the coming weeks in the order of 5-8% - a pullback we will be looking to buy.

S&P 500 daily chart

Source: TradingView

Nasdaq technical analysis

After a strong rally for Nasdaq into the end of 2023, we started the new year in a more cautious/neutral frame of mind.

While we would not be fighting Friday night's rip higher, we remain of the view that the Nasdaq is in the final stages (Wave V) of its rally from the October 2023 low and note again the bearish RSI divergence. Bearish RSI divergence occurs when prices make new highs, but the RSI fails to make a new high.

As such, we remain patient, waiting for a pullback to develop in the coming weeks in the order of 5-10% - a pullback we will be looking to buy.

Nasdaq daily chart

Source: TradingView
  • Source: TradingView. The figures stated are as of 22 January 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Find out more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.