S&P 500 Forecast & Index Technical Analysis -05 January 2023
05 Jan 2023
S&P 500 swings violently as Fed minutes suggest an increase in rates for a longer period of time
The S&P 500 swung wildly Wednesday, as the Federal Reserve December meeting minutes signalled higher for longer rates ahead at a time when data showing a tight labour market stoked fears of a pick-up in inflation.
The S&P 500 rose 0.3%
Federal Reserve policymakers agreed that a sustained period of restrictive policy would be needed to cool “unacceptably high” inflation, according to the minutes of the Fed’s December meeting released on Wednesday.
The minutes stoked fears of higher for longer rates just as data highlighted a slower-than-expected dent in labour demand.
The U.S. Labor Department’s latest Job Openings and Labor Turnover Survey (JOLTs) report, a measure of labour demand, showed job openings in November fell less than expected to about 10.5 million, compared with expectations of 10.0 million.
The JOLTS report was “very strong,” Jefferies said in a note, warning that without a “substantial reduction in labour demand…the Fed will not be comfortable pausing, let alone cutting rates.”
U.S. Treasury yields, however, continued to trade in the red and were reluctant to price in more aggressive Federal Reserve rate hikes.
Banking stocks, however, shrugged off the fall in Treasury yields, the enemy of net interest margins, as investors looked ahead to the start of quarterly earnings season in earnest next week.
S&P 500 TECHNICAL ANALYSIS
DAILY CHART:
S&P 500 is currently trading in up channel.
S&P 500 is currently trading below 20&50 SMA
RSI is in buying zone which suggests bullishness and Stochastic is suggesting up trend.
S&P 500 immediate resistance is at 3896.2 & its immediate support level is 3855.55
HOW TO TRADE S&P 500 IN THIS WEEK
S&P 500 is trading in up channel; it will continue to trade upside any trend reversal so, remain bullish on it.