The S&P 500 index experienced a subdued performance on Friday, August 30, 2024, trading near $5,590, as investors weighed mixed economic data and corporate earnings reports.
The U.S. second-quarter GDP growth was revised upward to 3.0%, signaling economic resilience. However, this positive revision was met with caution, as market participants turned their attention to upcoming inflation data, particularly the core Personal Consumption Expenditures (PCE) Price Index.
Key Economic Indicators
GDP Growth: Revised to 3.0% for Q2.
Inflation Focus: Core PCE Price Index in spotlight.
Fed Rate Cut Speculation: 66% chance of a 25 basis point cut in September.
Atlanta Fed President Raphael Bostic’s remarks added to the market’s uncertainty. He indicated that more evidence is needed before proceeding with rate cuts, contributing to cautious trading.
While the stronger GDP figures suggest a robust economy, the possibility of the Federal Reserve delaying rate cuts due to rising inflation concerns has tempered investor optimism, leading to a slight downturn in the S&P 500.
The following chart contain: – The dotted expected prices which are derived from the SPX Implied Volatility of 12.45%. – Past run and current run forecasts. pic.twitter.com/woFi85esUA
Global geopolitical tensions also played a significant role in the S&P 500’s performance. Conflicts in the Middle East and escalating tensions between Russia and Ukraine have heightened global uncertainty, leading investors to adopt a more cautious approach. The ongoing conflict in Ukraine, marked by Russian air attacks and Ukrainian troop buildups near Belarus, has created a volatile backdrop for the markets.
Meanwhile, increased violence in the West Bank, where Israeli forces have intensified operations against militants, raises concerns about broader regional instability. Although these geopolitical events have not directly caused sharp movements in the S&P 500, they contribute to an overall risk-averse sentiment, impacting market behavior.
S&P 500 Technical Analysis
Technically, the S&P 500 (SPX) is at a critical juncture, trading at $5,591.95, just above its key support level of $5,584.24. The index is hovering near the 50-day Exponential Moving Average (EMA) at $5,576.84, which serves as a near-term support for bullish traders. The Relative Strength Index (RSI) is currently neutral at 48, indicating a lack of clear momentum in either direction.
Key Technical Levels:
Pivot Point: $5,641.79 (crucial resistance for upward momentum).
Resistance Levels: $5,699.82, $5,754.94.
Support Levels: $5,584.24, $5,519.94, $5,441.61.
Since 2022, it’s been a series of higher highs and higher lows for S&P 500 High Beta relative to S&P 500 Low Volatility, though ratio has been rolling back over after rebounding [Past performance is no guarantee of future results] pic.twitter.com/iKwKNbJ2t2
A breakout above the immediate pivot point at $5,641.79 could pave the way for further gains, with resistance targets at $5,699.82 and $5,754.94. However, if the S&P 500 fails to hold above $5,584.24, the index could slide toward $5,519.94 or lower, potentially testing deeper support levels at $5,441.61 and $5,381.03.
Conclusion
The S&P 500 is navigating a complex landscape, influenced by mixed economic data, Federal Reserve rate cut speculation, and heightened geopolitical tensions. As the index hovers near critical support levels, traders should closely monitor how the S&P 500 interacts with the $5,641.79 pivot point. A breakout above this level could signal renewed bullish momentum, while a failure to hold current support could lead to further declines. Investors are advised to stay vigilant as the market responds to these evolving factors.
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.
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