The S&P 500 is facing a challenging environment as stronger-than-expected December jobs data have bolstered economic growth prospects, reducing immediate recession fears and supporting corporate earnings. However, this has also increased the likelihood of potential rate hikes, which could impact equities, especially those with high valuations. Despite this, demand for long-duration assets like Treasuries remains high, potentially stabilizing yields. Political factors, including potential fiscal policy adjustments by President Trump, may also influence market conditions, possibly capping inflation expectations and allowing equities to recover after initial selloffs. As traders shift their focus from inflation risks to growth prospects, the S&P 500 may find support around key levels, such as 5,800, and eventually overcome the jobs-driven selloff.
The ProShares UltraPro S&P 500 ETF (UPRO) experienced a significant decline, dropping 4.27% to $86.00 at 11:00 AM on Friday, January 10.