Summary:
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S&P500 retests key 2914-2921 support region
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US stocks reacted negatively to the Fed
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Tesla jumps over 5% as it raises capital
The market reaction to the latest Fed decision could be particularly telling with stocks dropping fairly sharply after what could be described as a pretty neutral update from the US central bank. The reason why this may raise concerns is that it shows just how far the market has gone in counting on support from the Fed with comments from Governor Powell that effectively ruled out a rate cut anytime soon causing a spate of selling in equities. All US indices ended the day firmly lower but the S&P500 has found support once more around the 2914-2921 region.
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The drop after Powell’s comments found some support around the prior lows in the 2914-2921 region and this could now be seen as a key line in the sand moving forward. Above there a recovery could ensue but a clean break through the region would open up the possibility of a deeper pullback to 2890 and potentially even 2877. Source: xStation
On the data front in the past hour there’s been a better than expected read from the latest US factory orders release, with the data for March showing a rise of 1.9%. This is above the 1.5% expected and marks an impressive recovery from the -0.3% seen last time out - itself revised up from -0.5%.
US factory orders made a pleasing recovery in March, rising at close to their fastest pace in month-on-month terms for several years. Source: Bloomberg
One stock that’s enjoyed a bright start to the session is Tesla with the automaker recovering from near 2-year lows after it was announced that the firm has raised $1.5B through a convertible note and share sale. According to a filing made by Tesla, the company will sell up to $1.35B in convertible senior notes, with underwriters given the chance to buy a further $202.5M for over-allotments. The notes are due in 2024 and Tesla founder and CEO Elon Musk is committed to buying $10 million in the offering, that is 41,896 shares. While the stock of Tesla was as much as 5% higher in early trade, these gains have been pared to a sizable extent, with around half of the rally handed back.
While shares in Tesla jumped on the news the gains have since been pared and the stock is not far from a 2-year low. The market recently broke down below the lower bound of its recent range around 247 and this level now appears to be offering some resistance to advances. Source: xStation
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