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How Large Speculator Positions on S&P 500 Index Moved Last Week

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S&P 500 Index managed a positive close

For the week ending February 23, the S&P 500 Index closed at 2,747.30, appreciating by 0.55% with most of the gains seen only on Friday. There was no major company news that drove market volatility in the holiday-shortened week. It was the FOMC meeting minutes on Wednesday that drove volatility higher. Markets displayed confusing reactions to the minutes as they jumped higher as soon as the minutes were released but dropped lower as investors realized that the FOMC was on course for further hikes. Increasing interest rates in an inflationary economy are considered to be negative for equity markets.

The S&P 500 information technology (XLK), materials, and energy (XLE) sectors posted more than 1% gains, and the telecom sector (IYZ) shed 2.4% in the week ending February 23.

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Speculators’ positions on S&P 500 Index                                               

Large speculators of the S&P 500 Index have decreased their net bullish positions for a fourth consecutive week from 24,531 contracts to 12,408 contracts, according to the Commodity Futures Trading Commission’s weekly commitment of traders report. This data was only up to Tuesday, February 20, which was before the release of the FOMC meeting minutes. The SPDR S&P 500 (SPY) and the iShares S&P 500 (IVV) posted gains of 1.9% for the week.

Outlook for the S&P 500 Index

This week will see some key retail store earnings releases from Macy’s, Kohl’s, and JCPenney, but market focus will be on bond yields, which will be influenced by the US Federal Reserve chair’s testimony to congressional committees on Wednesday. We’ll also see macroeconomic data like PCE inflation, the second 4Q GDP estimates, reports on the manufacturing sector, consumer goods, and monthly auto sales. In the next part of this series, we’ll look at why the US dollar managed to stay afloat last week.

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