spx
S&P500 (SPX) Falls to 5,297 Amid Disappointing Corporate Earnings and Fed’s Cautious Stance
Arslan Butt•Friday, May 17, 2024•2 min read
During the European trading session, the S&P 500 index maintained its bearish trajectory, experiencing a 0.21% decline, shedding 11.05 points to settle at 5,297.10.
This downward movement is largely attributable to lacklustre corporate earnings from prominent firms such as Deere & Co. and Martin Marietta Materials. Additionally, the cautious stance of Federal Reserve officials has overshadowed the potential for rate cuts, further pressuring the S&P 500 index.
Impact of US Inflation Data on S&P 500 and Fed Policy Expectations
Conversely, April’s softer-than-expected US inflation data has sparked anticipation of potential rate cuts by the Federal Reserve, lending some support to the S&P 500.
The subdued inflation figures are interpreted by market participants as a sign that the Fed might ease its monetary policy to bolster economic growth. This expectation of reduced borrowing costs has helped boost investor confidence, mitigating some of the index’s losses.
Investors are closely monitoring statements from Fed officials, including Atlanta Fed President Raphael Bostic and Cleveland Fed President Loretta Mester, who have commented on the recent inflation trends.
Despite signs of cooling inflation, policymakers remain cautious, preferring to assess additional data before making any policy changes. This dual influence of rate cut prospects and the Fed’s careful approach has provided a stabilizing effect on the market, curbing deeper losses for the S&P 500.
Fed’s Cautious Stance Tempers S&P 500 Optimism
Adding to the complexity, the dovish stance adopted by Fed officials on Thursday, emphasizing the need to keep borrowing costs elevated for an extended period, has introduced uncertainty into market sentiment. Richmond Fed President Tom Barkin stressed the importance of maintaining higher interest rates to control inflation, particularly noting persistent price pressures in the services sector.
These conflicting signals from Federal Reserve officials have left investors uncertain about the S&P 500’s future direction. Initial optimism regarding potential rate cuts has been tempered by cautious comments from Fed officials, leading investors to adopt a more guarded approach.
As a result, investors are attentively awaiting forthcoming economic data and further Fed communications to gain clarity on the future trend of the S&P 500.
S&P 500 Price Forecast
Currently, the S&P 500 (SPX) is trading at $5,297.09, reflecting a 0.21% decline for the day. The 4-hour chart identifies a pivot point at $5,324.98, which serves as a critical juncture for future price movements. Immediate resistance is noted at $5,350.61, followed by $5,383.93 and $5,419.62.
On the downside, immediate support is found at $5,263.46, with further support levels at $5,220.73 and $5,180.58. These levels are crucial for maintaining the current trend, as a break below them could signal a shift towards a bearish outlook.
The 50-day Exponential Moving Average (EMA) at $5,119.01 offers additional support, indicating a longer-term bullish trend despite the present pullback. The Relative Strength Index (RSI) stands at 74, indicating that the SPX is in overbought territory.
An RSI above 70 typically suggests that the asset may be due for a corrective pullback. Recent price movements in the SPX suggest a potential correction phase, with the index retreating from highs near the immediate resistance levels.
The ability of the SPX to remain above the pivot point of $5,324.98 is essential for sustaining a bullish outlook. In conclusion, the technical outlook for the SPX remains cautiously bearish below the pivot point of $5,324.98.
Investors should watch closely for any developments in economic data and Fed policy communications that could influence the S&P 500’s trajectory.
Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
ABOUT THE AUTHOR
See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.
His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.
His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
Related Articles
Comments
0
0
votes
Article Rating
Subscribe
Login
0 Comments
Inline Feedbacks
View all comments
Top
FX
Crypto
Commodities
Indices
Start Trading
Broker | Website | |
---|---|---|
🥇 | Visit Broker | |
🥈 | Visit Broker | |
🥉 | Visit Broker | |
4 | Visit Broker | |
5 | Visit Broker | |
6 | Visit Broker | |
7 | Visit Broker |
Join 350 000+ traders receiving Free Trading Signals
U have been succesfuly subscribed!