S&P 500 Slips to 5,950 as Fed’s Caution – Will the Bearish Trend Continue?

• Fed cautious on rate cuts, impacting market optimism

• PPI rose to 2.4% annually in October, signaling steady inflation

• Market expects fewer rate cuts, weighing on S&P 500 sentiment

UK’s Economic Contraction Fuels Global Concerns

The UK economy added to the S&P 500’s challenges with an unexpected contraction in September. The country’s GDP shrank by 0.1% for the month, while quarterly growth slowed to just 0.1%—a significant drop from the previous quarter’s 0.5% growth.

This slowdown has presented an early challenge for the new Labour government, which recently unveiled a budget focused on economic expansion, higher taxes, and increased borrowing.

In response, Chancellor Rachel Reeves emphasized the need for economic growth, expressing disappointment over the GDP figures.

Meanwhile, the Bank of England cut interest rates by 0.25% and adjusted its 2024 growth forecast to 1% from an earlier 1.25% estimate. This economic strain in the UK has contributed to investor caution and heightened global market uncertainty.

• UK GDP contracted by 0.1% in September, weighing on market

• Labour government introduces budget to spur growth

• Bank of England cuts growth forecast amid economic slowdown

Mixed Economic Data from China Adds to Market Uncertainty

China’s latest economic data offered a mixed picture, influencing global sentiment. Industrial production grew by 5.3% year-over-year in October, slightly below expectations, underscoring ongoing challenges in China’s manufacturing sector.

Meanwhile, retail sales grew by 4.8%, exceeding the anticipated 3.8% and marking an improvement from the previous month’s 3.2%, bolstered by the Golden Week holiday.

https://twitter.com/prodigy_trading/status/1857243310152138951

Despite these positive signs in retail, concerns remain over China’s struggling property sector, with property investment down 10.3% and home prices seeing a 5.9% decline in October, continuing a 16-month downtrend.

The mixed signals from China’s economy are adding layers of uncertainty, influencing global market dynamics and impacting investor sentiment toward the S&P 500.

• China’s industrial output misses forecast at 5.3% growth

• Retail sales rise 4.8%, driven by holiday demand

• China’s property sector struggles, weighing on sentiment

S&P 500 Price Analysis

The S&P 500 index currently trades at 5,949, down 0.61%, with immediate resistance at 5,987.18, signaling a bearish outlook as it hovers below its pivot. The Relative Strength Index (RSI) stands at 48, indicating mildly bearish momentum, though a push above 50 could signal renewed buying interest.

On the downside, immediate support is at 5,924, with further levels at 5,877 and 5,838 if selling pressure intensifies. The 50-day EMA, located near 5,883, may act as a strong support, aligning with the lower boundary of recent trading levels.

Key Insights:

• Immediate resistance at 5,987, with support at 5,924

• RSI at 48, hinting at neutral to bearish sentiment

• 50-day EMA at 5,883, a critical support level