S&P500 (SPX) Price Analysis – Dec 06, 2024
Daily Price Outlook
The S&P 500 index has been under pressure, currently trading around 6,075, after hitting an intra-day low of 6,072. This bearish performance is largely driven by a mix of economic uncertainty and investor caution.
However, the Federal Reserve's ongoing stance on interest rates and the overall outlook for the economy are contributing to this downward movement. The index has faced increased selling pressure, with many investors concerned about inflationary pressures, the potential for further rate hikes, and the overall health of the US economy.
Anticipated Fed Rate Cut and Strong Job Growth Could Provide a Boost to the S&P 500
Looking ahead, traders are anticipating that the Federal Reserve will cut interest rates by 25 basis points in its December meeting, with a 72% chance of this outcome according to the CME FedWatch tool.
The expectation of a rate cut is largely due to concerns over slowing economic growth and the Fed’s desire to preserve labor demand.
If the Fed does indeed reduce interest rates, it could provide a much-needed boost to the S&P 500 index, which has been struggling with bearish sentiment.
Lower rates are generally seen as favorable for stocks, as they reduce borrowing costs and increase liquidity in the market. This would make equities like those in the S&P 500 more attractive, potentially reversing some of the recent downward trend.
On the data front, economists expect the US economy to have added 200,000 new jobs, a significant increase from just 12,000 in October. The previous month’s jobs report was affected by hurricanes. The unemployment rate is also predicted to rise slightly to 4.2% from 4.1%.
If the Fed cuts interest rates by 25 basis points, it could boost the S&P 500 by making stocks more attractive due to lower borrowing costs and increased liquidity. Additionally, strong job growth may improve investor confidence, supporting the index.
Geopolitical Tensions and Their Impact on the S&P 500
In addition to economic factors, geopolitical tensions are also influencing the performance of the S&P 500 as the renewed conflicts in the Middle East, particularly between Israel and Hezbollah, have added to global uncertainty. These tensions, along with the ongoing war between Russia and Ukraine, are creating a risk-averse environment for investors.
Therefore, the fear of escalation in these conflicts can make markets more volatile, and the S&P 500 is no exception, as it faces downward pressure from the growing risk sentiment.
S&P 500 – Technical Analysis
The S&P 500 (SPX) is trading at $6,075.10, down 0.19%, as the index continues to face resistance near its pivot point of $6,093.28. Despite maintaining an overall bullish trajectory, the session reflects cautious sentiment amid broader market consolidation.
The RSI at 69 indicates the index is approaching overbought territory, suggesting potential for a short-term pullback.
Immediate resistance is observed at $6,122.27, with subsequent levels at $6,153.89 and $6,186.17. These levels represent critical barriers for further upside momentum.
On the downside, immediate support lies at $6,053.76, followed by $6,024.77 and $5,989.86, offering key areas for potential stabilization in case of a pullback.
The 50-day EMA at $5,937.87 underpins the broader bullish sentiment, indicating strong underlying support for the index.
However, a decisive move below the pivot point at $6,093.28 could trigger selling pressure, targeting support at $6,053.76 or lower. Conversely, a break above $6,122.27 may validate further gains toward the next resistance level of $6,153.89.
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