S&P500 Price Forecast: Slips Below $5066 Amid Fed’s Hawkish Stance & Geopolitical Concerns
The global market sentiment has been losing its previous day's upward traction, contributing to the bearish performance of the S&P 500.
The global market sentiment has been losing its previous day’s upward traction, contributing to the bearish performance of the S&P 500, which had been hitting record highs recently.
This decline was largely driven by ongoing geopolitical issues in the Middle East, which dampened market sentiment, including that of the S&P 500.
Furthermore, the hawkish stance of the Fed undermines the S&P 500 as it raises borrowing costs, reduces liquidity, and casts uncertainty over future economic conditions.
US Dollar Strengthens Amid Cautious Market Sentiment
On the US front, the US Dollar increased after reaching a recent low, with a cautious market sentiment prevailing. This cautiousness stems from the upcoming testimony of Federal Reserve Chair Jerome Powell before Congress, scheduled for Wednesday, and the release of several key US economic indicators.
These indicators include the ISM Services PMI, ADP Employment Change, JOLTS Job Openings, and the Nonfarm Payrolls report. Furthermore, Fed President Raphael Bostic stated that there’s no rush to lower rates due to a strong economy and job market.
Therefore, the hawkish stance of the Fed, indicating a reduced likelihood of rate cuts, can strengthen the US dollar. A stronger dollar can make US exports more expensive, potentially reducing corporate earnings and putting pressure on the S&P 500.
Humanitarian Crisis in Gaza Heightens Market Uncertainty
In Gaza, the situation is very serious. Many children are dying because they don’t have enough food and medical care. Israeli forces fired on people trying to get aid in Gaza City, causing more injuries and deaths.
Vice President Kamala Harris wants the fighting to stop right away, but she didn’t ask for Israel to completely stop attacking Gaza forever.
Therefore, the ongoing crisis in Gaza introduces uncertainty, potentially impacting investor sentiment and contributing to market volatility, which could influence the performance of the S&P 500.
S&P500 Price Forecast: Technical Outlook
The S&P 500 (SPX) experienced a notable decline, closing down over 1% at 5066, reflecting a cautious market sentiment. Positioned below its pivot point of $5102.96, the index finds itself at a crucial juncture.
With immediate resistance levels at $5153.66, followed by $5214.66 and $5269.96, the path to recovery seems challenging yet possible. Conversely, support levels are established at $5052.27, $4998.59, and $4941.93, providing potential safety nets against further declines.
The RSI stands at 68, suggesting a tilt towards overbought conditions but still under the threshold. The 50-day EMA at $5006.17 underscores a potential foundational support.
The current posture of the SPX indicates a bearish trend below $5102.96, but surpassing this pivot could reignite bullish momentum.
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