S&P500 (SPX) Price Analysis – Oct 4, 2024
Daily Price Outlook
Global market sentiment has been flashing red since the start of the day, and the week is set to conclude on a bearish note.
This is evident from the poor performance of U.S. stock indices, which began the session on a downbeat trajectory as investors grappled with rising geopolitical tensions and mixed economic data.
The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite are all on track for weekly losses. Currently, the S&P 500 is trading around 5,699.94, having reached an intraday low of 5,677.37.
Geopolitical Tensions and Market Uncertainty Drag S&P 500 Lower
As we mentioned above, the global market has been pressured by ongoing geopolitical tensions, particularly in the Middle East, which are weighing on investor sentiment and contributing to the bearish performance of the S&P 500.
Recently, the conflict between Israel and Hezbollah has escalated, with Israeli forces expanding their military operations and targeting key Hezbollah sites. This intensifying conflict, along with fears of a broader regional war, is causing significant market uncertainty.
Therefore, the combination of rising geopolitical risks and mixed economic data is making investors cautious.
The S&P 500 has been tracking losses throughout the week, reflecting the growing concerns over global instability. The market, which had shown strong performance in the first nine months of the year, is now under pressure as these tensions continue to escalate, leading investors to move away from riskier assets.
This has contributed to the S&P 500’s recent dip, with further downside expected if the situation remains unresolved.
US Dollar Strength and Solid Labor Market Data Weigh on S&P 500
On the US front, the broad-based US Dollar (USD) has been gaining strength, trading close to a one-month high. This increase is due to reduced expectations for aggressive policy easing from the Federal Reserve (Fed). Recently, the US Department of Labor reported a slight rise in unemployment benefit claims, which increased to 225,000 for the week ending September 28, up from 218,000 the previous week. This uptick follows a larger-than-expected rise in private-sector employment and an unexpected increase in job openings for August, suggesting a stable labor market.
Besides this, the Institute for Supply Management (ISM) reported that its Non-Manufacturing PMI rose to 54.9 in September, the highest level since February 2023. This positive economic data is leading traders to focus on the upcoming Nonfarm Payrolls (NFP) report, expected to show an addition of 140,000 jobs in September, slightly down from 142,000.
In the meantime, the unemployment rate is projected to remain steady at 4.2%. These encouraging labor market indicators are dampening expectations for significant interest rate cuts by the Fed, which is creating challenges for the S&P 500 as investors reassess their risk exposure amid rising uncertainty.
S&P 500 - Technical Analysis
The S&P 500 (SPX) is trading at $5,699.95, a slight decline of 0.17% for the session, as market sentiment remains cautious ahead of key economic data. The index is hovering just above its pivot point at $5,677.51, signaling indecision among traders.
A breakout above immediate resistance at $5,730.39 could provide a bullish confirmation, with potential targets set at $5,763.04 and $5,792.65. This movement would suggest a recovery from the recent consolidation phase and could attract more buyers to the market.
On the downside, strong support is positioned at $5,648.18, followed by lower levels at $5,617.74 and $5,583.62. A break below these levels could trigger a bearish momentum, potentially pushing the index further down to retest these support zones.
The 50-day Exponential Moving Average (EMA) at $5,709.35 is currently acting as an overhead resistance, limiting upward momentum in the near term.
The Relative Strength Index (RSI) stands at 46, indicating a neutral market position. This suggests that neither bulls nor bears have the upper hand, leaving the index in a wait-and-see mode.
For traders, a buy entry is recommended above $5,676, with a take-profit target at $5,737 and a stop-loss set at $5,647.
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