Daily Price Outlook
The SPX is trading around 3,916.64. Banking stocks fell as early enthusiasm over Swiss rival UBS Group's historic state-backed bailout of struggling lender Credit Suisse gave rise to growing concerns about the risks of the massive debt that major banks are releasing.
Banking Sector Crisis
The forced acquisition of Credit Suisse by UBS, arranged by the Swiss government, the latest attempt by governments around the globe to limit a crisis threatening the banking sector, had mixed results for US stocks on Monday.
UBS Group AG will pay $3.23 billion for the 167-year-old Credit Suisse Group AG in a deal arranged by Swiss authorities on Sunday and take on up to $5.4 billion in losses.
The start of the trading week left investors on edge as smaller banks continued to face pressure to strengthen their deposit bases in the aftermath of Silicon Valley Bank's demise earlier this month.
In addition, global central banks rushed on Sunday to support the flow of money with several planned currency swaps to guarantee banks had the dollars they required to function in the face of the threat of a swift loss of trust in the financial system.
Although such events seemed to boost investor confidence, the spike immediately faded as attention turned to the significant impact certain Credit Suisse bondholders would experience because of the UBS takeover.
US stocks (SPX Index) fell, Treasury rates dropped, and the dollar fluctuated as measures to protect the world banking system failed to calm market concerns.
The dollar index is trading around 103.80, and the US 10-Year Bond Yield is trading down at 3.326.
Fed Interest Rate Speculations
Meanwhile, according to statistics from CME Group, the Federal Reserve has a 62% chance of raising interest rates on Wednesday, which might cause further turmoil in the banking sector.
The banking industry's recent turmoil increased the risks for the Federal Reserve's interest rate policy. Therefore, market participants are betting on a 25 bps rate rise by the Fed or a pause.
If the US Federal Reserve shows an unwillingness to raise rates in the future or delays present hikes, the stock index may climb. But, the SPX will surely drop if Fed will show a hawkish stance.
S&P500 Price Chart - Source: Tradingview
S&P500 Intraday Technical Levels
Pivot Point: 3930
S&P500 – Technical Outlook
The S&P 500 (SPX) has encountered a significant obstacle around the $3,960 level, which is reinforced by a downward channel visible in the 2-hour timeframe.
On the lower side, SPX's immediate support is at the $3,850 level, and breaking below this level could potentially lead to further selling toward the $3,765 level. However, leading technical indicators such as RSI and MACD are in a buying zone, indicating a bullish bias among investors.
On the upside, a bullish breakout above the $3,960 level could open up further buying opportunities toward $4,085 or even higher.
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.