S&P 500 Reacts to Rate Hikes - Forecast for 2022

2022年1月10日

The S&P 500 had a tough week with notable losses in tech stocks. The stock market tends to be reactive to interest rate decisions so this performance may not be so surprising when considering the hawkish tone of the Fed. The fight against inflation looks set to dominate 2022 and Goldman Sachs predicts four rate hikes this year from the Fed.

But, is the bull run over for S&P 500? There are reasons to be optimistic that it may continue even with these market conditions. You may recall that many top companies have fared well in the pandemic. Investors will be more wary of risk assets, but blue chips with strong fundamentals could experience strong growth throughout 2022. Once March rate hikes are priced in, we could see the index regain its strength and continue a push upwards.

In the short term, bearish pressure could see the index slip to 4630 which is a strong support level. There is strong resistance around the 4725 level where the MA200 is on the 4-hour timeline. Once this resistance is broken, we could see a test of the ascending channel and from there price could continue to surge past all-time highs.