SPX500 Weighed as Recession Fears Creep Back In
SPX500 Analysis
The broader US index managed to look past the decision by OPEC+ countries to slash oil output significantly [1] and made a strong start to current month and week. A series of poor jobs data and soft PMIs from the US though, dampened sentiment and sparked fresh recession fears, sending the Wall Street lower.
Tuesday's release by the Labor Department showed that Jobs Opening in February dropped below the 10 million mark for the first time in nearly two years. A day later, ADP's data showed that the number of Employed people In the private sector in March increased by just 145,000 - a far cry from last month's 261K addition. Markets now turn to today's claims and of course Friday's NFPs, which could determine the trajectory of the index.
SPX500 posted a two-day decline as a result, which makes it vulnerable to the critical confluence of supports, found at the broader 4,030-3,997 region. This includes the EMA200, the daily Ichimokou Cloud and the 38.2% Fibonacci of the March low/April highs advance. However, the downside appears well protected and a strong catalyst would be required for those levels to the breached.
On the other hand, the US Fed adopted a more conservative stance after the SVB failure and projects just one more hike to 5.25%, before pausing. Markets are more dovish and expect rate cuts ahead, with CME's FedWatch Tool assigning the highest probability to rates falling to 4.25% by the end of the year. [2]
These are tailwinds for SPX500, which finds support today and remains at the drivers seat, as long as corrections are contained by the aforementioned critical support. As such, it has the ability to push for the 2023 high (4,196), although 4,326 look distant.
Wall Street will remain closed on Friday, and after they return from their long weekend, investors will focus on the new earnings season that gets underway. The banking sector kicks things off, with JP Morgan Chase reporting on Friday April 14, which is one of the firms that will be on my radar during this quarter.
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
| Retrieved 06 Apr 2023 https://www.opec.org/opec_web/en/press_room/7120.htm | |
| Retrieved 01 Dec 2023 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html |
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