On Tuesday, after Monday's recovery, leading US indices closed lower. However, SP500 still moves above the 4,000 critical level as energy stock. Before going to check more economic data and more, I have to give you more detail about the energy sector's behavior.
FED uncertainty, CPI, and Energy sector behavior!
So far, in 2022, Exxon Mobil Corp (NYSE: XOM) and Chevron Corp (NYSE: CVX) have gained 57% and 49%, respectively, while Occidental Petroleum Corp (NYSE: OXY) has soared about 140%. The main reason for such a significant improvement is a 53% year-to-date oil price increase.
While the market was pricing on two 50 bps rate hikes in June and July meetings, the latest comments from Fed chair Powell and other FOMC members created uncertainty about the US central bank's policies. On top of that, the war in Ukraine and the aftershocks of the recent quarantines in China all handed together to crash the markets. Since mentioned companies have a reasonable weight in the SP500 basket, they paused the bears or reduced their speed.
On the other hand, as I mentioned above, the Oil price increase helped the energy sector increase by 41.77% year-to-date, one of the main reasons to see the SP500 still holding the 4,000 level.
On the data front, ahead of Friday's NFP numbers, the job openings were reported at 11.4 million, down slightly from the 11.55 million reported for the prior month. However, still, it is above 11 Million, which shows the power of the labor market.
Elsewhere, the May ISM manufacturing PMI index followed closely by many investors to see the inflation effect, increased slightly to 56.1, up from 55.4 reported the prior month.
Later today, while Beige Book will be published as FED reduces its balance sheet, we have to watch and follow the New York Fed President John Williams and St. Louis Fed President James Bullard's speeches.
Given all mentioned data and news, the overall condition is not favorable. However, against declining stocks, we have other stocks also increasing, which means that leading indices, especially the broader S&P index, will be safe from severe falls. This is what we can see in the technical chart as well. In the H1 chart, we can see that 4,000 is the critical support, and the overall OBV trend is moving under 20 DMA, as you can see in the bellow figure.