Major US indices ended mixed last Friday despite lower bond yields, with the S&P

Market Recap

Major US indices ended mixed last Friday (DJIA -1.12%; S&P 500 -0.48%; Nasdaq +0.38%) despite lower bond yields, with the S&P 500 registering its second week of losses to reach correction territory while the VIX reverted to trade back above its key 20 level. As the indices’ market breadth heads further into oversold territory and the CNN Fear and Greed Index dips back into ‘extreme fear’, there may be attempts for some short-term relief this week, but buyers may still face the arduous task of seeking out bullish catalysts to sustain any rallies.

Optimism around Amazon’s earnings last Friday were quickly overridden by risks of conflict escalation in the Middle East, while the closely-watched US Personal Consumption Expenditure (PCE) inflation data did not offer much room for the Federal Reserve (Fed) to stand down on its hawkish tone ahead of its upcoming meeting. While the September inflation figures came in line with market expectations, more persistence in core service-sector prices has been the cause for concern, given that it is what the Fed places greater focus on.

Brent crude were up 3%, while gold prices pushed to a new five-month high, reflecting some expectations in place that tensions in Israel and Gaza could escalate into a wider geopolitical conflict. The safe-haven gold has reclaimed its key psychological US$2,000 level, while prices have traded above its Ichimoku cloud on the daily chart as reflection of buyers in greater control for now. Any near-term signs of exhaustion from buyers may come from any reversal back below the US$1,973 level, which may then leave the US$1,940 level on watch next.