Retailers’ cautious stance on SPY could stem from fears that any of the week’s key catalysts could bring the ETF crashing down.
The SPDR S&P 500 ETF Trust ($SPY), an exchange-traded fund (ETF) that tracks the broader S&P 500 Index, rebounded on Monday amid expectations that tech earnings will solidify the market rally.
Monday’s gain marked a reversal from Friday, when the ETF edged down 0.03%, but the rebound has come with below-average volume. The ETF opened Monday’s session higher and moved roughly sideways in a range, holding mostly above the $580 psychological barrier.
Apple, Inc. ($AAPL), the top stock in terms of weighting (7.25%) rallied, while big tech peers such as Alphabet, Inc. ($GOOGL) ($GOOG), Meta Platforms, Inc. ($META) and Amazon, Inc. ($AMZN) also advanced.
Other heavyweights such as Nvidia Corp. ($NVDA), Microsoft Corp. ($MSFT) and Tesla, Inc. ($TSLA) fell marginally to modestly.
Despite SPY’s resilience, retail sentiment toward the ETF turned ‘bearish’ (27/100) from ‘neutral’ (46/100) a day ago. Message volume has seen an uptick from ‘low’ to ‘normal.’ The SPY is the second-most top trending ticker on Stocktwits.
Main Street also has its fair share of market-moving catalysts this week starting with the Job Openings and Labor Turnover data for September on Tuesday and ADP private payrolls report for October on Wednesday.
Also on tap are the price consumption expenditure index, aka Federal Reserve’s favorite inflation gauge, and weekly jobless claims data, both due on Thursday. The trading week ends with the key October non-farm payrolls report due on Friday.
Retailers’ caution could stem from fears that any of these catalysts could bring the SPY crashing down. Earnings disappointment or strong data that confounds the rate outlook may prove to be negative for the market and the ETF.
The ETF is trading just shy of its all-time intraday high ($586.12 hit on October 16) and closing high ($584.59 hit on October 18).
As of 2:10 pm ET, SPY gained 0.45% to $581.67.
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