S&P500 (SPX) Price Analysis – Dec 27, 2024
Daily Price Outlook
The S&P 500 index is trading at 6,037, down slightly on the day, and touching an intraday low of 6,007. The downward momentum reflects growing concerns among investors, driven by a mix of factors including economic uncertainty, Federal Reserve policies, and geopolitical risks.
Recent data indicates that U.S. consumer spending rose by 0.4% in November, reflecting strong demand for goods and services. The labor market also showed resilience, with employers adding 227,000 jobs in November, rebounding from slower growth in the prior month.
However, corporate profits have experienced fluctuations, with a decrease to $3,128.50 billion in the third quarter from $3,141.56 billion in the second quarter. These mixed signals contribute to investor uncertainty in equity markets.
Federal Reserve’s Monetary Policy Adds to Bearish Tone
The Federal Reserve's recent decision to cut interest rates by a quarter point, coupled with its projections for only two additional rate cuts in 2025, has introduced uncertainty into the markets.
This cautious stance has led to increased borrowing costs for businesses, potentially squeezing profits and dampening investor enthusiasm.
Consequently, investors are becoming more selective, favoring defensive sectors over growth stocks, which has contributed to the downward pressure on the S&P 500 index.
Following the Fed's announcement, the S&P 500 experienced a significant decline, marking its worst performance on a Fed decision day since 2001. The index fell nearly 3%, reflecting investor concerns about the slower pace of rate cuts and the potential impact on corporate earnings.
Geopolitical Tensions Weigh on S&P 500 Performance
On the geopolitical front, the tensions continue to significantly influence the performance of the S&P 500 index. Escalating conflicts in Eastern Europe and the Middle East have heightened risk aversion among investors. These uncertainties have raised concerns about potential disruptions to global trade, leading to a shift in capital toward safe-haven assets such as the US Dollar.
This shift has resulted in reduced appetite for equities, including the S&P 500, contributing to its downward trend.
Furthermore, the fears of energy supply disruptions, particularly in regions affected by geopolitical instability, have further weighed on market sentiment. As concerns grow over the potential for higher energy prices and broader economic implications, investors remain cautious.
The heightened geopolitical risks, coupled with ongoing economic uncertainties, have caused volatility in the S&P 500, making it more susceptible to declines as investors seek safer investment options.
Looking ahead, geopolitical risks are expected to remain a significant factor in shaping market sentiment and investor behavior, continuing to exert pressure on equity markets, including the S&P 500 index.
S&P 500 – Technical Analysis
The S&P 500 index is trading at 6037.58, down slightly by 0.04%, reflecting a cautious tone near the pivot point at 6047.03. On the 4-hour chart, the index shows signs of consolidation above the 50-day EMA at 6020.59, with the RSI at 58 indicating moderate bullish momentum, though strength appears to be fading.
Immediate resistance is seen at 6092.04, followed by 6140.58 and 6192.73. A sustained move above these levels would signal renewed bullish momentum and potential for further gains. On the downside, support lies at 5982.79, with deeper levels at 5906.16 and 5841.25.
A break below 6045 could trigger additional selling pressure, pushing the index toward 5980 and possibly lower. Alternatively, holding above the pivot at 6047.03 could reignite upward momentum, with bulls targeting resistance at 6092.04. Traders should watch these levels closely, as a breakout will provide clarity on the next trend.
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