S&P500 (SPX) Price Analysis – Nov 08, 2024
Daily Price Outlook
The global market sentiment has been positive, with the S&P 500 having its best week in nearly a year, reaching 5,973 points and hitting an intra-day high of 5,983 level. Despite no clear catalyst for the market’s rise, analysts suggest that the gains were mainly a continuation of the post-election rally, driven by the expectation of tax cuts and less regulation under Trump’s leadership, which could boost corporate profits.
However, the S&P 500, along with the Dow and Nasdaq, saw impressive gains this week, with all three major indexes closing near record highs. The Fed’s rate cut and strong earnings have given investors confidence, but there are concerns about Trump’s proposed fiscal policies, like increased spending and tariffs, which could push inflation higher and complicate future rate cuts.
Despite these risks, market sentiment remains strong, and the S&P 500’s positive performance is expected to continue in the medium term, fueled by economic growth and investor optimism.
US Federal Reserve Rate Cut and Mixed Economic Data Impact on S&P 500
On the US front, the Federal Open Market Committee (FOMC) reduced its key interest rate by 0.25% to a target range of 4.50%-4.75% during its November meeting. This rate cut is part of the Federal Reserve’s effort to ease monetary policy as inflation slowly moves closer to its 2% target. Fed Chair Jerome Powell explained that the central bank is continuing with rate cuts due to tight monetary conditions, but will carefully monitor economic data to decide on future rate changes.
This move has fueled expectations that the Fed may continue easing policies, especially since inflation is slowly moving towards the 2% target. As a result, the US Dollar Index (DXY) rose to 104.50, while US Treasury bond yields stood at 4.20% for 2-year bonds and 4.33% for 10-year bonds.
On the data front, US economic data showed mixed signals. Initial Jobless Claims for the week ending November 1 came in at 221,000, which was slightly higher than the previous week’s revised 218,000. On the other hand, the ISM Services PMI rose to 56.0 in October, above expectations, signaling strength in the services sector.
These economic developments impact the S&P 500 index as investors assess the Fed’s policy direction and economic growth. The rate cuts and strong services data could support further gains in the S&P 500, though concerns about inflation and jobless claims may limit upside potential.
S&P 500 – Technical Analysis
The S&P 500 (SPX) has seen upward momentum, currently trading at 5,973.09, marking a 0.74% gain. After breaking above the pivot level at 5,928.40, the index is approaching immediate resistance at 5,988.57.
Should SPX hold above this pivot, it could extend gains to the next resistance levels at 6,056.54 and 6,103.34, bolstered by strong bullish sentiment. However, with the Relative Strength Index (RSI) at 76, the market is in overbought territory, which raises the likelihood of a short-term pullback or consolidation phase.
On the downside, immediate support lies at 5,877.15, followed by additional support levels at 5,838.15 and 5,809.17. The 50 EMA is positioned at 5,816.12, acting as a foundational support level that aligns with a bullish trend.
Traders may view 5,988 as a critical level; failing to sustain above it could trigger selling pressure with a potential target of 5,928.40. A recommended stop-loss can be set near 6,033.14 to limit risk on short positions if the market reverses.
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