The S&P 500 estimation, as Treasury yields are peaking, is still eroded by equity valuations, hurting the S&P 500 price gauge. Later today, representatives from the Fed and the ISM non-manufacturing PMI will be present.
The S&P 500 fundamental background
Despite the turnabout in yesterday’s trading session. Showing a notable reversal after an aggressive Fed address. The S&P 500 index is still under pressure (with US stock futures hinting towards a second redstart).
Governor Christopher Waller indicated that the Federal Reserve might need to increase rates beyond what is already factored in.
This came after data on jobless claims that were better than anticipated and added to the already tight labor market in the US.
The S&P 500 links with US 2-year Treasury yield,
The US 2-year Treasury yield crossed the swing high from Nov 2022 at 4.881 percent. Though, quickly returned below.
Treasury markets are currently at a critical inflection point. Therefore, it is likely that they may be waiting for a further leg up, in which case US equities will probably keep sliding on weakening valuations.
On the other hand, yesterday’s long upper streak may have indicated a peak – in the recent hawkish rebalancing of the Fed’s rates, because it is typically linked with a following decline.
Today’s speakers from the Fed and the ISM non-manufacturing PMI are anticipated
Today’s headlines will be dominated by the ISM services PMI publication rather than the S&P report, which is less significant in the US.
Since the US economy is mainly driven by services, and even though projections are expected to drop for Feb, the number still falls inside of positive territory. This update is vital for the markets.
Numerous Fed presenters who will likely maintain their combative tone even if PMI data misses will conclude the trading day.
Economic Activity Schedule
Technical Perspective
The rising wedge chart pattern on the weekly SPX index graph is toying with a breach south. Therefore, the direction of next week’s price movement will depend heavily on how this week’s candles close. A close downward would likely enable a move more toward the psychological mark of 3900.00.
Looking at the graph with a shorter time horizon, the 200-day MA has been a reliable reference point for bears, who have recently held this area in 3 distinct sessions. A breakthrough could be sparked by weak fundamental data, whereas a close above 4000.00 could negate a short-term drive downward.
Levels of resistance: 4000.00 50-day MA
Levels of support: 390.00
