Market Insights

The S&P 500 paused at a key level yesterday, while a soaring U.S. dollar weighed on global stocks.

It might feel like an eternity, but only three weeks ago, the S&P 500 rolled over near 2800. It had been support in August but turned into resistance during last month’s volatility swoon. Once again the index is struggling at that level.

S&P 500 with 200-day moving average and potential resistance near 2800.

This time, Jerome Powell’s Federal Reserve shares some of the blame by keeping the door open to a fourth interest-rate hike on December 19. Interestingly, policymakers threw a curve ball by observing that the “growth of business fixed investment has moderated from its rapid pace earlier in the year.”

Under other circumstances, that kind of language might be viewed dovishly. But it didn’t seem to matter on Thursday because traders were buying the U.S. dollar (@DX) before the news and kept buying it after. They also sold emerging-market stocks, along with gold (@GC) and silver (@SI).

The bigger story is spreading caution toward China. The giant Asian economy has clearly been slowed by U.S. President Trump’s tariffs. Its October trade surplus, for instance, missed estimates and UBS estimated import duties have cut shipments of some products to the U.S. by almost one-third. Stay tuned for more heading into the next G20 meeting on November 30 and December 1.

Bears have been just as active in Brazil, which enjoyed a brief surge of optimism after a pro-business politician was elected president on October 28. But in the last week sellers hammered key symbols like Petrobras (PBR) and the iShares MSCI Brazil ETF (EWZ). Oil’s slide to a new six-month low didn’t help much, either.

So a lot of things are going on. But the main takeaway seems to be a sentiment shift in favor of domestic over global. Speaking of domestic, traditional retailers like L Brands (LB) were among the market’s best performers yesterday. Wages are up, gas is down and Christmas is around the corner.