The S&P 500 Rises Out of Bear Territory Again

The S&P 500 (Index: SPX) tracked upward in the week ending 8 July 2022. The index closed the week at 3,899.38, putting it 18.7% below its all-time record high from 3 January 2022.

Stock price volatility was normal throughout the week, with the trajectory of the S&P 500 rising within the dividend futures-based model's projected trajectory associated with investors focusing on the current quarter of 2022-Q3:

Alternative Futures - S&P 500 - 2022Q3 - Standard Model (m=-2.5 from 16 June 2021) - Snapshot on 8 Jul 2022

The outlook for the index throughout 2022-Q3 has improved from what we first described several weeks ago, which still held as recently as last week. As you can see in the latest update to the alternative futures chart that now covers 2022-Q3, the level of the S&P 500 is within spitting distance of wher the model projects the trajectory of the index will go after we reach the end of the latest redzone forecast range.

Here's our summary of the market-moving news headlines from the Fourth of July holiday-shortend first trading week of the 2022-Q3 calendar quarter:

Tuesday, 5 July 2022
Wednesday, 6 July 2022
Thursday, 7 July 2022
Friday, 8 July 2022

The CME Group's FedWatch Tool now projects a three-quarter point rate hike for July 2022 (2022-Q3). That's followed by half point rate hikes in September (2022-Q3) and November (2022-Q4), then a quarter point rate hike in December (2022-Q4) to wrap up the year.

The Atlanta Fed's GDPNow tool now projects real GDP will shrink by just 1.2% for the just ended quarter of 2022-Q2, improving from the much more pessimistic -2.1% it indicated last week.