The S&P 500 broad market index futures
fell by 1.2% to 5393 points this week, despite a 2.0% rise to 5564 on Thursday
morning, before erasing all gains and dropping by 1.0% by the end of the day.
The first half of the week was encouraging with strong Q2 results from
Microsoft (MSFT) and Meta (META), coupled with the Federal Reserve affirming
interest rate cuts in September, which saw market bets on such cuts at 100%.
However, concerns about the U.S. economy's health overshadowed these positives.
The ADP Nonfarm Payrolls report showed 122,000 jobs added against a consensus
of 147,000, and the ISM Manufacturing PMI dropped to 46.8 points from 48.5,
indicating deeper contraction. Investors are worried that prolonged high
interest rates have pushed the U.S. economy towards a recession, making two
more rate cuts likely in 2024.
Amazon’s disappointing Q2 revenues of $147.98
billion versus $148.68 billion expected, along with a weak Q3 forecast, added
to the negative sentiment. Investors are now keenly awaiting the U.S. July
labor market report due on Friday. Wall Street expects Nonfarm Payrolls at
176,000, with unemployment steady at 4.1% and average hourly earnings at 0.3%
MoM. Goldman Sachs suggests that the Beryl hurricane could have reduced job
additions by 15,000, potentially bringing the figure down to 165,000. Our
statistical modeling predicts July Nonfarm Payrolls between 176,000 and
204,000, with unemployment likely unchanged at 4.1%.
Large investors are demonstrating
bearish behavior, as evidenced by $2.4 billion net outflows from the SPDR
S&P 500 ETF Trust (SPY) this week. This is not critical, but may become such in case of additional
increase today.
Technically, the
S&P 500 index's outlook remains negative, in a downside formation with
primary targets at 5200-5300 points. Immediate resistance is at 5470-5490
points, with support at 5370-5390 points. A correction signal has appeared at
5511 points.
Oil prices have retested
the support range of $80.00-82.00 per barrel for Brent crude and recovered
slightly. Thus, a breakthrough of the support that was retested several times
has become unlikely now. Prices are supported by increasing military tensions
between Israel and Lebanon.
Gold prices, having
reached mid-term targets of $2000-2100 per troy ounce, are now targeting
extreme levels of $2400-2500. Prices may continue to hoover within the
$2400-2500 range in August. The nearest resistance is at $2490-2510 per ounce,
while the support is at $2390-2410.
The EURUSD is
retesting the support at 1.08100-1.08400. This pivot point could determine the
next move, with higher chances for a rebound towards 1.10000. The rise of the
pair could be prompted today by Nonfarm Payroll numbers release.