S&P 500 broad market index futures have
experienced a 0.4% decline, currently resting at 5085 points. At their lowest,
prices dipped to 5009 points, marking a 1.7% loss. Despite this, strong
corporate reports from the "Magnificent Seven" helped the index
recover most of its losses.
The recent Federal Reserve (Fed) meeting
caught investors by surprise with its dovish decisions. The central bank
announced a reduction in its government bond-buying program, from $60 billion
to $25 billion per month starting June 1st. Fed Chair Jerome Powell emphasized
that policymakers are not considering any interest rate hikes, despite the
recent uptick in inflation during February and March. Some investors, however,
believe that rate hikes may be necessary.
While Powell acknowledged the persistent
inflationary pressures, he also expressed concerns about elevated inflationary
risks. This seeming contradiction may reflect fears of a significant economic
downturn and market correction, which are topics of intense debate in the
market. Consequently, investors are hesitant to open new long positions. The
SPDR S&P 500 ETF Trust (SPY) reported net capital outflows of $3.1 billion
this week, marking the fourth week of net outflows in the last five weeks.
Despite the dovish signals from the Fed and
strong Q1 earnings results from companies like Amazon (AMZN) and Apple (AAPL),
stock indexes are showing reluctance to rally. Apple also announced an
additional buyback of $110 billion. It appears that market participants are
cautious about potential market corrections and are avoiding additional risks
ahead of the summer holidays.
The upcoming U.S. labor market report on
Friday is expected to deliver mostly neutral numbers. Our statistical modeling
forecasts April Nonfarm Payrolls at 236,000-238,000, in line with Wall Street
analysts' expectations. Unemployment is likely to remain at 3.8%, with average
hourly earnings expected to increase by 0.3% MoM. While this report could bring
some volatility, it is unlikely to shift existing market sentiment
significantly.
Technically, the S&P 500 index remains
within a downside formation, with targets at 4800-4900 points and extreme
downside targets at 4400-4500 points. Resistance has shifted lower to 5040-5060
points, with the benchmark currently above this level, signaling strength. The
next resistance is located at 5090-5120 points, with support at 4890-4920
points. Continued correction could solidify the downside scenario as the
baseline trend.
Oil prices are under pressure, breaking out to
the downside of the consolidation range of $87.00-92.00 per barrel of Brent
crude. Downward pressure is expected to persist until mid-May, with support at
$81.00-83.00 per barrel.
Gold prices, having reached mid-term upside
targets, are expected to consolidate as they hover around $2000-2100 per troy
ounce, with extreme targets at $2400-2500. The nearest support is at
$2290-2310, while resistance is at $2390-2410 per ounce. Continued support may
result in further correction.
The Greenback has experienced a 0.4% decline
after intervention by the Bank of Japan, with the USDJPY retreating to 153.00.
The EURUSD remains around 1.07400, continuing its trajectory towards 1.05000,
pending a correction in the S&P 500 index.