The global market sentiment has been bearish, as indicated by the downbeat performance of the S&P 500 index, which continued its downward trend and hovered around 5,078.

The decline in the S&P 500 was primarily influenced by discouraging US economic data, which puts pressure on the index as investors react unfavorably to signs of economic weakness.

Furthermore, ongoing geopolitical tensions in the Middle East were seen as another significant factor contributing to the S&P 500’s downward pressure.

Impact of US Economic Data on S&P 500 Index

On the US front, recent data indicates slower growth in services and a decline in factory orders, potentially impacting the S&P 500. The decrease in the ISM Services PMI and factory orders implies potential obstacles to economic expansion.

Furthermore, if the Federal Reserve cuts rates by less than anticipated, it could signal concerns about future economic performance. These factors might heighten uncertainty among investors, potentially affecting the S&P 500’s near-term performance.

On the data front, US factory orders declined by 3.6% in January compared to the previous month, indicating weakened demand for manufactured goods. Year-on-year, orders saw a 2.0% decrease.

Moreover, the ISM Services PMI dropped to 52.6 in February, signaling slower-than-expected growth. Steven Friedman, a former New York Fed economist, suggested the Fed might exercise caution with interest rate cuts in 2024 due to economic growth and volatile inflation.

Impact of Gaza Conflict on S&P 500 Index

On the geopolitical front, the news of continued Israeli attacks in Gaza, denial of entry for aid convoys, and casualties in both Gaza and Lebanon could have a negative impact on investor sentiment.

However, the heightened geopolitical tensions lead to market uncertainty, which could result in a negative shift for the S&P 500 index.

S&P500 Price Forecast: Technical Outlook

The S&P 500 Index, a barometer of U.S. equities, exhibits signs of consolidation, hovering around the pivot point of $5104.77. The index finds immediate resistance at $5124.79, a breach of which could pave the way to further resistance levels at $5153.66 and $5269.96.

On the downside, support forms at $5102.96, with additional safety nets at $5052.27 and $5019.90, just above the significant psychological level of $5000.

The 50-Day EMA at $5019.90 suggests underlying bullish sentiment, potentially providing a bounce-back platform for the index.

The Relative Strength Index (RSI) reads at 57.15, indicating a neutral market momentum without clear signs of overbought or oversold conditions. This suggests that while the market is not showing immediate signs of a trend reversal, it lacks the conviction for a robust rally without further catalysts.

In summary, the S&P 500’s short-term outlook remains cautiously optimistic, with traders looking for a decisive break above the first resistance to confirm a bullish continuation, or a dip below the pivot point to signal a potential reversal to bearish sentiment.