S&P 500
broad market index futures are rising by 0.2% to 6060 points. Nobody want to
take significant actions before the Federal Reserve (Fed) meeting this
Wednesday. Policymakers could easily surprise the market. Is chair Jerome
Powell was much unpredicted recently. Thus, the benchmark is trading in a quite
narrow range between 6030 and 6090 points during the last 11 days. Technical
range for a breakthrough is even narrower at 6050-6070 points.
A
breakthrough to the upside would send the benchmark to 6150 points or even
higher. A downside drop could send the S&P 500 index towards 5700-5800
points. The latter event is unlikely for the month of December. Form a
historical retrospective, the S&P 500 index is rising by 1.5% in average in
the month of December, and by impressive 4.25% in the month of January. To sum up
this average forecast we should have a target at the unimaginable 6400 points
by the end of January 2025.
This drastically
contradicts with hawkish expectations from the nearest Fed meeting.
Policymakers are expected to cut interest rates by a quarter point and provide
a dot plot projections with another two interest rates cuts in 2025, down from
four expected cuts estimated in September. Powell should speak about strong
labour market and bumpy inflation. Such a rhetoric would not support the stock
market much. Instead, it may prompt a correction. However, any dovish messages
outside this scenario would be taken very positively. This might be a chance
for the S&P 500 index to rally towards 6400 points. If the benchmark
surpasses 6150 points this scenario could materialize.
Some
important data will be released this week too. PMI indexes will be released in
the U.S., in the Eurozone and in the U.K. November retails sales in the United
States will be published on Tuesday, while U.S. Q3 GDP will be revealed on
Thursday with expected slowdown to 2.8% QoQ from 3.0%. PCE index, the favorite
FED inflation gauge, will be released on Friday. Wall Street analysts are
expecting a slight pickup in inflation. Many macroeconomic data point to a
hawkish scenario for the Fed. But policymaker may positively surprise the
market if Jerome Powell want to become a Santa Claus.
The SPDR S&P
500 ETF Trust (SPY) reported revised net inflows of $8.3 billion last week
excluding Friday compared to the $6.2 billion during the previous week. So, there
are more chances for the benchmark to test the resistance to continue to the
upside towards 6050-6150 points.
From a technical
perspective, the S&P 500’s outlook is unchanged. The index surpassed
initial targets at 5700-5800 points and hit the targets at 6050-6150. The
benchmark has to hold above the resistance at 6150 points to climb further.
Otherwise, a correction could appear. A pullback could emerge in the last ten
days of December.
In commodities, Brent
crude prices are hovering at $73.80 per barrel. The nearest resistance is at
$78.00-80.00, with support at $69.00-71.00. The Organization of Petroleum
Exporting Countries and its allies know as OPEC+ delayed production increase
until April 2025, as expected. Chances for a decline below the support towards
$59.00-62.00 per barrel have risen since then. But a chaos surrounding Syria
political regime overhaul created threats to oil supplies from the Middle East.
This supports prices.
Gold prices are steady
at $2,662 per troy ounce this week. The nearest resistance is at $2,750-2,770.
In case of a breakthrough, prices could continue toward $2,870-2,890, with
possible highs of $3,200-$3,300.
In the currency
market, the EURUSD is trying to recover, but the Dollar refuses to surrender.
The pair declined by 0.6% to 1.05020 last week holding at 1.04900 on Monday. To
greenlight the upside scenario with targets at 1.09500-1.10500 the pair has to climb
above 1.05700.