Market Overcomes Early Losses to End Positively

Coming into the trading session, some selling was seen across the indexes, with banks starting off the earning season. When financial leaders such as CitiGroup (C), Bank of America (BAC), and J.P. Morgan (JPM) reported their earnings, they each respectively took a tumble. For various reasons, these companies sold off ahead of market opening. Despite beating earnings expectations, “fear of a recession” comments lowered them.

Market Continues Upward Trend with Dip Buying

The financial sector had a rough start, with big banks reporting their earnings. Despite beating expectations, Citigroup, Bank of America, and J.P. Morgan all took a hit. This caused some selling across the indexes and dragged the Dow Jones down, pulling the Nasdaq down as well. As a result, the S&P 500 futures fell over 50 points between the reporting and the market opening.

As soon as the market opened, buying pressure quickly lifted the market. The key moving averages held firm and provided support during any dip. As the morning progressed, the buying volume slowed as investors waited for the release of the University of Michigan (Umich) Consumer Sentiment Index data. 

The market eagerly awaits the release of the University of Michigan (Umich) Consumer Sentiment Index data, with the median forecast being 60.7. When the numbers came out, the January report revealed a reading of 64.6, which was 3.9 points higher than expected. This indicates that consumer optimism about the economy is on the rise. While there is still room for improvement, this upward trend is positive for the economy as it suggests that consumers are more likely to spend money, which can further boost the economy.

Market Momentum Builds as Catalysts Stack Up

The positive consumer sentiment report caused buying volume to pick up again. The recent economic reports need to align and support each other to create a clear picture. Currently, each report adds to the overall trend, building momentum for the market.

Throughout the rest of the trading session, steady buying across the market helped push the indexes higher. The technology sector was the clear leader today, with Nasdaq recovering from a negative start. Two standout performers were Amazon and Nvidia, with each stock rising over 2%. This trend is worth watching as technology companies continue to drive the market’s growth.

As the trading session closed, the S&P 500 encountered resistance at the same level as the previous resistance during the U.S. Consumer Price Index (CPI) swing highs. This level is significant as it marks where the S&P 500 had previously seen a sharp decline. Investors should keep an eye on the 4,020 level as the market heads into next week.

One precautionary measure

Despite the market’s current strength, it is facing significant resistance from a structural perspective. Some of our Simpler Traders have pointed out a macro trend line formed by lower highs starting from the 2022 high of the year. From a technical analysis standpoint, the market is at a crucial level.

Traders should also be aware that next Monday is a 3-day weekend, and the stock market will be closed in observance of Martin Luther King Jr. Day. 

Technology Sector Leads Market Comeback on Friday

The Nasdaq and the S&P 500 were positive to close the session. The S&P 500 futures closed up 0.36%, gaining 14.5 points, while the Nasdaq futures closed up 0.58%, an increase of 66 points. The Dow Jones followed, closing up 0.27%, adding 93 points.