The S&P 500 broad market index futures
rose by 1.5% to 5300 points this week, hitting a new all-time high at 5326
points before pulling back slightly on hawkish comments from Federal Reserve
(Fed) officials.
The index began its ascent on May 14,
following the release of the April producer prices in the United States. The
Producer Price Index (PPI) increased to 2.2% YoY, which is typically negative
for stocks, but the March reading was revised down to 1.8% YoY from the
previously reported 2.1%. This revision inspired investor optimism. The major
surprise came on Wednesday with the release of the April Consumer Price Index
(CPI), which showed a slowdown to 3.4% YoY from 3.5%, as expected. The monthly
reading came out better than expected at 0.3%. This marked the first decline in
inflation in 2024, bolstering investor confidence. Additionally, retail sales
figures for April remained flat, down from 0.6% MoM in March, signaling a
cooling consumer sector and prompting investors to buy stocks.
U.S. 10-year Treasury yields dropped to 4.31%
from 4.50% over the week. Bets on a Fed interest rate cut in September rose
above 50%. The SPDR S&P 500 ETF Trust (SPY) reported $4.1 billion in net
inflows. However, some Fed officials, including Cleveland Fed President Loretta
Mester, Richmond Fed President Tom Barkin, and New York Fed President John
Williams, voiced support for maintaining high interest rates. They were not
overly impressed by the inflation data, indicating it wasn't sufficient to
justify imminent rate cuts. Fed Governor Christopher Waller and San Francisco
Fed President Mary Daly are scheduled to speak on Friday; their comments could
further influence the market. If they echo the hawkish sentiments, the S&P
500 index may continue to decline. Otherwise, it might return to its new highs.
From a technical perspective, the S&P 500
index remains within an upward formation targeting 5250-5350 points, suggesting
limited upside potential. Extreme targets lie at 5650-5750 points, though these
levels appear unrealistic in the near term. Immediate resistance is at
5340-5360 points, with support at 5240-5260 points.
Oil prices are recovering from the support
range of $81.00-83.00 per barrel for Brent crude, with the nearest resistance
at $89.00-91.00 per barrel. No immediate fundamental factors suggest a
significant upward movement in oil prices.
Gold prices, having reached mid-term upside
targets, are expected to consolidate 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. A breach of support may trigger
additional correction.
The Greenback continues to descend following
weak U.S. macroeconomic data releases. The EURUSD surpassed 1.08950 and is
currently retreating. Primary upside targets have been met, so a drop to
1.05000 should not be excluded in the mid-term.