S&P 500 futures are up 0.55% to 5775
points, following a pullback from an all-time high of 5797 points earlier this
week. The release of the FOMC Minutes on Wednesday boosted the index,
contributing to its new record levels.
The FOMC Minutes revealed a divide among
Federal Reserve officials. Some policymakers favored a smaller
quarter-percentage-point rate cut, citing a sustainable decline in inflation
and an improving labor market. This cautious stance contrasts with the
September meeting, which resulted in a more aggressive half-point rate cut.
Optimism about the U.S. economy's resilience grew, though this contrasts with
Fed Chair Jerome Powell's aggressive stance due to concerns about a stalling
labor market.
The Atlanta Fed’s GDPNow model raised its Q3
U.S. GDP growth estimate to 3.2% YoY from 2.5%, helping the S&P 500 rise
0.83% to 5749 points earlier this week. However, mixed macroeconomic data later
caused a retreat in the index. September inflation data showed headline
inflation rising to 2.4% YoY and core inflation reaching 3.3%, slightly above
expectations. Additionally, the labor market showed signs of weakness, with
initial jobless claims jumping by 33,000 to 258,000, and continuing claims
increasing to 1.861 million, the worst level seen this year. These numbers
fueled concerns about a potential recession, heightened by geopolitical
tensions in the Middle East, including a possible Israeli retaliation against
Iran.
Investors have been taking profits over the
past week. Initial net inflows of $1.0 billion into the SPDR S&P 500 ETF
Trust (SPY) turned into net outflows of $6.0 billion last Friday, with another
$4.0 billion in outflows this week. This erased a significant portion of the
previous $19.8 billion in inflows. Despite the strong September labor market
report, this shift suggests that the market's upward momentum could be slowing,
with profit-taking possibly marking the beginning of a larger correction.
Historical patterns suggest that the S&P 500 could continue climbing toward
the 6000-point level, but signs of exhaustion are emerging.
Upcoming economic data releases, including
September producer prices, and the start of Q3 earnings season for the banking
sector, are expected to provide mixed results. As a result, the stock market
may close the week on a neutral note, with potential for further gains next
week.
From a technical perspective, the S&P 500
index has reached its initial target of 5700-5800 points. If the index breaks
above 5810 points, it could move toward the next targets of 6100-6200 points.
In the commodities market, Brent crude oil
prices have surged above $79.00 per barrel. The decision by OPEC+ to delay production increases until December is
supporting prices. Additionally, tensions in the Middle East are pushing Brent
toward the $89.00-91.00 resistance range. From the negative side,
Saudi Arabia's potential plans to boost production is weighing on prices.
Gold prices have reached their mid-term target
of $2,000-2,100 per ounce and could rise further to resistance levels at
$2,750-2,770. If no reversal occurs, gold could push towards extreme targets of
$2,850, with the potential to reach $3,200-3,300 per ounce.
In the currency market, EURUSD is trading near
key support at 1.10000. A breach of this level could see the pair fall to the
1.05000-1.07000 range, especially if the European Central Bank takes dovish
action next week. However, if support holds, the EURUSD may remain within the
1.10000-1.11000 range.