S&P500 (SPX) Price Analysis – Sep 13, 2024
Daily Price Outlook
The S&P 500 has recently made a strong comeback, reaching an intra-day high of 5,600.71, after a period of volatility and economic uncertainty. Over the past 24 hours, the index has gained considerable ground, thanks to several key factors that have boosted investor confidence and helped stabilize the market.
The major contributor to this positive shift is the rebound in technology stocks. After facing months of pressure and volatility, the tech sector has started to recover, driving much of the recent gains in the S&P 500.
However, the broader economic picture has also brightened, with recent data pointing to signs of stabilization. Positive trends in consumer spending and business investment have helped lift the overall outlook, making investors more optimistic about the economy’s direction.
This renewed confidence has fueled the S&P 500’s upward momentum, as more investors are willing to invest, believing the worst of the uncertainty may be behind us.
Economic Data and Fed Speculation Drive Market Movements and S&P 500 Performance
On the US economic front, the US Dollar has weakened following Thursday’s Producer Price Index (PPI) report, which revealed that inflation is cooling more than anticipated. This has led to speculation that the Federal Reserve might opt for a more substantial interest rate cut in September.
Investors are closely watching for any hints of a shift in the Fed's stance, hoping it could provide further support to the economy.
According to the CME Group’s FedWatch Tool, there's now a 40% chance that the Fed could cut rates by 50 basis points at its next meeting. This possibility has generated excitement in the markets.
Additionally, US Treasury bond yields have fallen to near their lowest levels of 2024, creating a more favorable environment for the S&P 500. As a result, investors are feeling more optimistic, seeing potential for further gains in both the stock market and precious metals.
On the data side, the latest numbers show that inflation in the US is easing. The annual headline Producer Price Index (PPI) rose by 1.7%, slightly below the expected 1.8%, while the core PPI, excluding food and energy, increased by 2.4%, just missing the 2.5% forecast. This cooling inflation suggests some relief from rising prices.
Meanwhile, the US Department of Labor reported that 230,000 people filed for unemployment benefits in the week ending September 7, a bit higher than recent numbers, signaling a mild softening in the labor market. These factors are shaping investor sentiment and influencing the S&P 500’s performance.
Impact of the US Presidential Debate on the S&P 500 Index
On the flip side, the recent US presidential debate between former President Donald Trump and Democratic nominee Kamala Harris has introduced some political uncertainty into the markets. With the debate highlighting key issues such as the economy, inflation, and future economic policies, it's made a significant impact on investor sentiment.
This political drama has contributed to the ongoing volatility of the S&P 500, as market participants keep a close eye on any developments that could sway future policy directions.
Kamala Harris’s win in the debate, as highlighted by a CNN poll, has shifted focus to potential changes if the Democratic ticket takes the upcoming election.
Investors are now closely scrutinizing the candidates' policy proposals, especially those related to taxation, regulation, and economic stimulus.
Harris’s strong performance has brought to light the possibility of significant policy shifts, which could have broad implications for various sectors and the overall market.
As a result, market participants are paying increased attention to how these potential changes might shape the economic landscape.
S&P 500 - Technical Analysis
The S&P 500 (SPX) is trading at $5,595.75, up 0.75% for the day, signaling continued bullish momentum as investors shrug off broader economic concerns. While the index has posted steady gains, technical indicators suggest a cautious yet optimistic outlook for the near term.
The Relative Strength Index (RSI) currently reads 59, reflecting neutral territory and leaving room for additional upside without entering overbought conditions.
The pivot point is positioned at $5,645.33, a critical level that traders will closely monitor for direction. Immediate resistance lies slightly below this at $5,641.79, with subsequent resistance levels at $5,699.82 and $5,766.23.
A break above these levels could pave the way for further gains, potentially pushing the index to fresh highs as bullish sentiment continues to support the market.
On the downside, immediate support is found at $5,518.48, with additional support at $5,441.61 and $5,381.03.
While the 50-day Exponential Moving Average (EMA) is trending upward, currently at $5,524.79, this provides a solid floor for the index should the market face any short-term volatility or profit-taking.
From a tactical perspective, a buy entry above $5,572 could be a strategic move, targeting the pivot point at $5,645.33 for profit-taking. A stop-loss at $5,520 offers prudent risk management, as it coincides closely with both the 50-day EMA and nearby support levels.
In summary, while bullish momentum remains intact, cautious optimism is warranted given the proximity to key resistance levels and neutral RSI readings.
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