S&P 500 reverses early session gains, falls back from above 4400 to low 4300s in choppy trade

• All three major US bourses have reversed earlier gains and are now trading in negative territory.
• The S&P 500 was at one point above 4400 but is now in the low 4300s.
• Sentiment remains mixed and conditions choppy as investors digest this week’s Fed meeting and the latest strong US GDP numbers.

Having been as much as 1.8% higher in earlier trade and above the 4400 level, the S&P 500 has reversed lower in choppy trade and is back to trading in the red in the low 4300s. At current levels around 4320, the index trades lower by about 0.6% on the day. The Nasdaq 100 and Dow indices have seen similarly choppy trading conditions, with both also reversing sizeable gains earlier in the session to slip into the red. The Nasdaq 100 index is now down about 1.0% on the day and probing the 14K level again for a third successive session, while the Dow has reversed from earlier highs in the 34.75K area to just above 34K where it trades lower by about 0.3% on the session. Sentiment remains mixed and conditions choppy as investors digest this week’s Fed meeting and the latest strong US GDP numbers.

Looking at the S&P 500 GICS sector performance, there is a clear defensive bias, with Utilities (+0.4%) and Consumer Staples (+0.3%) leading. Most other sectors are either flat or in the red, aside from the big tech-dominated Communication Services sector, which is about 0.25% higher. The comparatively decent performance of this sector versus the likes of the Information Technology (-1.0%) and Consumer Discretionary (-1.8%) sectors highlights some interesting rotation going on under the surface. The first thing to note is that Tesla has seen a massive 9.0% decline post earnings (the carmaker warned of lasting supply chain issues) and this is weighing on the Consumer Discretionary sector. Meanwhile, Netflix has rocketed nearly 7.0% higher after billionaire investors Bill Ackman hailed the share’s recent post-earnings drop as a great buy-the-dip opportunity.

Elsewhere, the semiconductor subindex within the Information Technology sector is getting battered in wake of poor Intel (-7.5%) earnings, with the co. also warning about supply chain issues. The PHLX Semiconductor Index is down nearly 5.0% on the day. Elsewhere, despite the downbeat tone in most non-defensive equity sectors, large-cap tech stocks have been doing well (Microsoft +1.0%, Amazon +1.0%, Apple -0.4%, Google flat, Meta (Facebook) +0.4%). One equity analyst said, “we believe the biggest opportunity in markets right now is in dividend growth stocks (like the aforementioned large-cap tech names) that have strong balance sheets and cash flows, and can thrive in an environment no matter what the Fed does”.