S&P500 (SPX) Price Analysis – Dec 20, 2024
Daily Price Outlook
The S&P 500 Index is currently trading in the red, holding at 5,867.08 and reaching an intra-day low of 5,866.
This decline shows the broader market's reaction to the Federal Reserve’s hawkish stance, rising bond yields, and ongoing geopolitical and economic uncertainties.
While the index has shown resilience in the past, the current conditions suggest a challenging environment for US equities.
Fed's Hawkish Stance Weighs on Market Sentiment
On the US front, the Federal Reserve's recent signals indicating a slower pace of interest rate cuts in 2025 are supporting the US dollar and Treasury bond yields.
However, these moves are creating headwinds for the equity market, particularly for growth stocks that are sensitive to higher interest rates.
As bond yields rise, investors may find fixed-income assets more attractive than equities, leading to a shift in market dynamics.
This is especially concerning for the S&P 500, which has a significant portion of its constituents in sectors such as technology and growth companies, which are more vulnerable to higher rates.
Despite the Fed's stance, the broader market remains uncertain due to fears of slower economic growth and other challenges. As a result, the S&P 500 index is experiencing selling pressure, reflected in the current pullback.
Geopolitical Risks and Economic Uncertainty Drive Caution
Apart from this, the ongoing geopolitical tensions and economic uncertainty are adding additional stress to the S&P 500.
The risk of a US government shutdown, coupled with concerns over trade wars and global instability, has led to a more cautious sentiment among investors.
The equity market is particularly sensitive to such risks, as any escalation could derail global economic growth and disrupt corporate earnings.
Furthermore, investors are wary of the US Personal Consumption Expenditure (PCE) Price Index release, the Fed's preferred inflation measure.
Traders are closely watching this key inflation report, which could influence the Fed's future policy moves. If inflation remains high, it may prompt the Fed to keep interest rates elevated for longer, further pressuring the equity market.
S&P 500 – Technical Analysis
The S&P 500 Index (SPX) is trading at $5867.07, reflecting a slight dip of 0.09% in today’s session. The index is consolidating near the $5919.77 pivot point on the 4-hour chart, signaling cautious sentiment among traders.
Immediate resistance lies at $6005.28, with further barriers at $6070.88. A sustained breakout above these levels could reverse the recent downward trajectory, with bullish momentum targeting higher highs.
On the downside, immediate support is found at $5852.81, with critical levels at $5804.87 and $5754.58.
Technical indicators lean bearish, with the RSI at 26 indicating oversold conditions. While this could suggest a short-term bounce, the price remains below the 50 EMA at $6032.28, reinforcing the overall bearish bias.
A decisive break below $5852.81 could accelerate selling pressure, testing deeper support levels. Conversely, recovery above the pivot at $5919.77 is necessary to regain upward traction.
Traders should consider a cautious strategy amid this oversold scenario. A sell limit around $5908, targeting $5837 with a stop loss at $5940, aligns with the bearish outlook.
A move below $5804.87 would confirm further downside potential, while a recovery above $6005.28 could negate the bearish trend.
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