SPX500 Cautious after Strong NFPs

  • SPX500
    (${instrument.percentChange}%)

SPX500 Analysis

The US Fed had made a dovish shift last month, hinting at peak rates and upgrading its own projections, which now imply at least three rate cuts this year [1]. However, policymakers have called for prolonged restrictive stance and have not closed the door to further tightening. They have made substantial progress on easing price pressures, but inflation remain well above the 2%.

Furthermore, the labor market is still strong, despite coming into better balance, a fact highlighted by last week's data and mainly Friday's robust report. The US economy added 216,000 jobs in December, in the biggest addition since September. Unemployment steadied at 3.7%, not far from its multi-decade lows, while wages growth picked up speed.

These figures cast some doubt over the prospects of a Fed pivot and SPX500 is subdued after last week's slide. It is exposed to the crucial EMA200 and the 23.8% Fibonacci of the last leg up (4,650-37) and breach could sent it to the 38.2% level, but deeper correction has a higher degree of difficulty.

Friday's NFPs may have cooled down a bit the market pricing for rate cuts by the Fed, but CME's FedWatch Tool still assign the highest probability for this process to start in March and send rates 150 basis points lower by the end of the year [2]. SPX500 is cautious, bit above the EMA200 the upside momentum is intact and has the ability to set new all-time highs (4,820).

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Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 08 Jan 2024 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20231213.htm

2

Retrieved 16 Apr 2024 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

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