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Is the US500 bouncing back from a US recession already? Here are five factors to watch as the S&P 500 powers up for recovery

By Joseph Toppe


In the early stages of a rebound, investors should consider broad indexes like the S&P 500, one expert says. – Photo: Shutterstock

Wall Street traders are keeping an eye on the S&P 500 (US500) and the bear market rallies predicted down the road, despite the likelihood of economic recession and lingering inflation.

In an interview with, David Russell, VP of market intelligence at the Tradestation Group in the US, said “At a time like this, it’s very difficult for investors to buy individual stocks.”

“In the early stages of a rebound, it makes the most sense to focus on the broad market index,” he added. “As rallies take shape, traders can look for where the relative strengths will be.”

S&P 500 (US500) price chart

Over the past five days, the broad market index has rebounded and is showing a one-month gain of nearly 6.5%. However, the benchmark remains down 3.37% the last three months and is 12.82% below the redline year-to-date.

Here are five factors traders should consider as they weigh the outlook for the S&P 500.

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Factor 1: The market leans forward

Russell said: “Investors don’t care about recession or backward numbers, because the stock market is always looking forward.”

“Like Wayne Gretzky, Wall Street wants to skate where the puck is going to be and not where it was,” he explained. “There are signs inflation is cooling and the business cycle is slowing, allowing the market to catch up and begin looking forward.”

Year-to-date, the Dow Jones Industrial Average (US30) is down 9.93% but has moved 4.29% into green territory the last month, while the tech-heavy Nasdaq 100 (US100) remains 18.89% below the redline year-to-date but has improved 9.32% the last month.

Nasdaq 100 (US100) price chart

Factor 2: Volatility equals opportunity

As the threat of additional rate hikes linger and investors lean risk-off under a bearish trading environment, volatility on Wall Street is expected to continue.

In an interview with, Michael Sincere, best-selling author of Understanding Stocks and Understanding Options, said “We are in for a choppy market for quite a while, at least until the bear market is over.”

“While recessions and inflation impact consumers and investors, experienced traders will use a negative market environment to buy stocks that are on sale,” he continued. “For traders, volatility and getting a good price is more important than the current economic environment.”

Factor 3: Inflation and rate hikes

Last month, the US Federal Reserve announced it would raise interest rates once again to curb the four-decade-high inflation rate, going up 0.75% to an overall range between 2.25% and 2.5%.


3,980.40 Price
+0.600% 1D Chg, %
Long position overnight fee -0.0241%
Short position overnight fee 0.0018%
Overnight fee time 21:00 (UTC)
Spread 1.7


12,798.80 Price
+0.420% 1D Chg, %
Long position overnight fee -0.0241%
Short position overnight fee 0.0018%
Overnight fee time 21:00 (UTC)
Spread 3.0


32,293.00 Price
+0.350% 1D Chg, %
Long position overnight fee -0.0241%
Short position overnight fee 0.0018%
Overnight fee time 21:00 (UTC)
Spread 11


300.30 Price
+0.200% 1D Chg, %
Long position overnight fee -0.0213%
Short position overnight fee -0.0007%
Overnight fee time 21:00 (UTC)
Spread 0.3

“We’ve gotten through the initial phase of the Fed turning the screws on the market and are nearing the end of their aggressive hawkishness,” Russell said.

“So, investors can now take a longer-term view and begin assessing opportunities in areas they haven’t looked for a long time,” he added. “While August is a relatively low volume month, moves can be bigger, and with momentum coming out of July, this could be another strong month.”

Factor 4: Growth stocks

Because the US Federal Reserve is expected to relax its hawkish strategy in the future, there will be another chance for traders to enter the growth sector.

Typically, speculative companies can be a gamble during economic downturns or recession, while Utilities (XLU) stocks in water, gas, and electric remain in high use and are often a haven for investors.

Utilities (XLU) price chart

Russell said, “Growth stocks, on the other hand, have a lot of secular growth, and companies like Microsoft (MSFTand Apple (AAPL) still hold significant opportunities.”

“When you consider Apple’s iPhone upgrade cycle and Microsoft’s cloud migration, the future doesn't look so bad, making it easier to be bullish in the near term and speculate.”

Apple (AAPL) price chart

Factor 5: Bear market rallies

While a bearish market environment has forced many investors to the sidelines this summer, trading small is predicted to continue as rallies and selloffs come and go.

“There will be bear market rallies as we start to recover,” Russell said.

“At the same time, traders should be careful assuming the weakness and volatility of the first half will continue into the second,” he cautioned. “As the broad market recovers and investors begin looking long term, individual stocks and rallies will surface as opportunities.”


Markets in this article

US 500
3980.4 USD
23.9 +0.600%
Utilities Select Sector SPDR Fund
65.77 USD
2 +3.140%
160.37 USD
1.11 +0.700%
280.84 USD
2.91 +1.050%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

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