S&P 500 caps best January in four years

Stocks rose on Tuesday as strong earnings and encouraging inflation data pushed the S&P 500 to its best January since 2019.

The S&P 500 gained 1.46% to 4,076.60.

Investors on Tuesday got bullish news on the inflation front before the Federal Reserve’s latest decision on interest rates. The employment cost index, which is an important measure of wages eyed by the Fed, showed compensation increased 1% in the fourth quarter. It was below the 1.1% estimate from Dow Jones. Traders widely expect a quarter-point increase in rates by the Fed, but they are hoping softening inflation will cause Chairman Jerome Powell to signal a pause in tightening in the near future.

The stock market appears to be rallying in anticipation of pause in rate hikes from the Federal Reserve, even as the central bank is expected to hike its benchmark rate again on Wednesday, according to Lauren Goodwin, economist and portfolio strategist at New York Life Investments.

“This ‘Fed pause’ window we believe is likely to prove bullish, with a long duration and growthy tilt. In fact, we see that expectation as playing a large role in the 2023 rally already, and it’s a good reminder why being fully invested is an important component of building long-term wealth,” Goodwin said.

January 31 is the best day for the S&P 500 in the month of January, according to data compiled by Carson Investment Research on the average performance per day since 1950.

The S&P 500 was up 0.97% Tuesday. In January, the S&P 500 gained 5.7%, which is the best monthly performance for the index since November.

S&P 500 TECHNICAL ANALYSIS

DAILY CHART:

S&P 500 is currently trading in up channel.

S&P 500 is currently trading above all SMA

RSI is in buying zone which suggests bullishness and Stochastic is suggesting no trend.

S&P 500 immediate resistance is at 4086.05 & its immediate support level is 4073.39

HOW TO TRADE S&P 500 IN THIS WEEK

S&P 500 is trading in up channel; it will continue to trade upside until any trend reversal so, remain bullish on it.

TRADE SUGGESTION-BUY AT 4057.03, TARGET AT 4093.48, SL AT 4047.12