Powell opens wild market action

Thursday developed into a session of news driven madness in the stock market.

With Federal Reserve (Fed) Chairman Jerome Powell set to speak at 9:10 a.m. Eastern, right before the opening bell, both the Nasdaq and S&P 500 futures fell at the open. This downward price action could have been  Wall Street pricing in anticipation of Powell saying something negative.

When the bell sounded, Powell was still speaking but  the speech fell flat as the market reacted positively. Powell presented nothing new or more negative in his comments.

Powell simply reiterated what has already been in place for Fed plans. Powell confirmed that aggressive benchmark  interest rate hikes will continue. A 75 basis point rate raise is planned, and the Federal Reserve is committed to fighting inflation.

The market ultimately rallied and regained early losses at the cash session opening. Once Powell was done speaking and the market avoided any negative catalyst, the bulls were able to take control and provide a bullish narrative. 

Mortgage rates jump, market responds

The market held bullish sentiment through the early hours until a news catalyst hit the market. A new economic data release stated that U.S. mortgage rates jumped to 5.89%, the highest level since 2008.

This news ultimately disrupted the bullish momentum, but did not put a stop to it. This news created a pullback, bringing price action back to the Volume Weighted Average Price (VWAP) level. This pullback to VWAP confirmed the bullish sentiment for the day as VWAP held support. From this level the bulls were able to regain control and continue rallying higher toward 4,000 in the S&P 500.

After holding VWAP, the bulls continued to push forward, sending the market higher. The psychological level of 4,000 seemed imminent. Using intense buying pressure and volume level, the bulls had no problem reaching 4,000.

Chicago Fed President Charles Evans speaks

The bulls even exerted enough strength to surpass the psychological level of 4,000, sending the market slightly higher before another Fed spokesman took the podium at the Cato Institute 40th Annual Monetary Conference in Washington, D.C. 

The market did not like what Evans had to say. The news was similar to what Powell previously stated, but the market digested it differently.

“We could very well do 75 BPS in September,” Evans said. He continued, stating that he is “worried about inflation expectations getting out of control”.

Additionally, Evans sees the economic situation  taking at least two years to work out the supply chain issue with computer semiconductor chips. Evans gave his outlook on the future of interest rates by saying, “I expect to top out rates at 4% next year.”

These comments sent the market plummeting toward the low of the day. The bears quickly took the market back to negative territory by stopping the bulls in their tracks. This volatile price action sent the market back to the psychological level of 3,950, erasing the previous 50+ point gain since the opening bell.

Bulls rally again to take back momentum

After tumbling on statements from Evans, the bulls had taken enough time off to regain control. The market sentiment was no longer bullish but was strong enough to neutralize the adverse reaction to Evans’ comments.

News catalysts had driven whiplashing price action up to this point, but the rest of the day would be clear waters. The bulls had taken this opportunity of no friction to send the market rallying beyond earlier success. 

With the bulls fully back in control, the stock market jumped back to the previous high of the day. The bulls had just enough strength to close the day while making new highs when the closing bell could be sounded. The way the bulls ended the day was an exclamation point, as nothing could stop the mission they set out to accomplish. 

Stock market closes positive again

Both the Nasdaq and the S&P 500 were positive to close the day. The S&P 500 futures closed up 0.75%, gaining 30 points, while the Nasdaq futures closed up 0.65%, a gain of 79 points. The Dow Jones joined in the gains, adding 191.14 points, improving 0.61%.