Home/Central banks/Fundamental/Indices/News events/Non-farm payrolls/Technical analysis

S&P 500, Nasdaq 100 – Wall Street Slides at the Open as Powell Hints at Modest Rate Cuts

Share Print 0
  • Wall Street indexes fell as Fed Chair Powell’s comments suggested a less aggressive rate cut in November than anticipated.
  • US PMI data indicated a sharp decline in manufacturing new orders, job shedding, and rising output price inflation.
  • Triangle breakout pattern still in play from a technical standpoint. Retest and continuation?

Most Read: Brent Crude – Oil Slides 2% in European Trade Before a Recovery, OPEC+ Meeting Next

The major Wall Street Indexes fell sharply at the open as market participants digested comments from Fed Chair Jerome Powell. Fed Chair Powell appeared to push back against expectation of another 50 bps rate cut in November.

S&P 500 Heatmap Post US Open

Source: TradingView (click to enlarge)

The S&P 500 finished the US session yesterday just 4 points off the all time highs around 5772. At Monday’s press conference, Powell reiterated that another 50 bps of cuts could be expected before the year is out, which market participants interpreted as ruling out a 50 bps cut in November. 

This is more evident when one looks at the remarkable change in the probability of a 25 bps cut in November. Prior to Fed Chair Powell’s comments, markets were pricing in a 25 bps cut at around 40%, now being priced in at around the 60% mark.

The US PMI data release today was poor to say the least with manufacturing PMI recording its sharpest fall in new orders since June 2023. Among the other key concerns cited by the report was rising levels of job shedding and the quickening of output price inflation despite the slowdown in new orders. 

Full PMI Report: https://www.pmi.spglobal.com/Public/Home/PressRelease/4f55b2967c9e4015897fd410acaf38c6

Jobs data which has become key over the last few weeks started filtering through today with US JOLTS job openings increasing to 8.04 million in August, according to the BLS.

Source: BLS, FinancialJuice (click to enlarge) 

Labor data has become crucial for markets as the US faced rising recessionary fears ahead of the September rate cut. The NFP report and unemployment rate on Friday will be key in determining if the soft landing narrative still holds water. 

Attention will now turn to a host of Federal Reserve speakers scheduled for later in the day ahead of tomorrow’s services PMI data which could stoke volatility as well.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge) 

Technical Analysis 

S&P 500

From a technical standpoint, the S&P is in an interesting area. Having completed a break of the triangle pattern that was in play the index looked set for an extended move higher.

However, as cautioned in the Weekly Market Outlook, the index was extremely overbought and thus a correction could not be ruled out. In fact i cited that this would be perfect as it would allow bulls a potential opportunity to get involved from an area of confluence.

A retest of the triangle pattern would provide an unbelievable risk to reward ratio considering a move higher from there does come to fruition.

It is the beginning of Q4 as well and thus some unexpected moves may occur as market participants re-balance their portfolios and exposure ahead of what is shaoing up to be an exciting time for financial markets in Q4.

Read the weekly market outlook technical analysis on the S&P 500 here: Markets Weekly Outlook – Will the NFP Report Validate Rate Cut Optimism?

S&P 500 Daily Chart, October 1, 2024

Source: TradingView (click to enlarge) 

Support

  • 5669
  • 5613
  • 5538

Resistance

  • 5750
  • 5913
  • 6000

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Zain Vawda

Zain Vawda

Market Analyst at OANDA
Zain is an experienced financial markets analyst and educator with a rich tapestry of experience in the world of retail forex, economics, and market analysis. Initially starting out in a sales and business development role, his passion for economics and technical analysis propelled him towards a career as an analyst.

He has spent the last 3 years in an analyst role honing his skills across various financial domains, including technical analysis, economic data interpretation, price action strategies, and analyzing the geopolitical impacts on global markets. Currently, Zain is advancing in obtaining his Capital Markets & Security Analyst (CMSA) designation through the Corporate Finance Institute (CFI), where he has completed modules in fixed income fundamentals, portfolio management fundamentals, equity market fundamentals, introduction to capital markets, and derivative fundamentals.

He is also a regular guest on radio and television programs in South Africa, providing insight into global markets and the economy. Additionally, he has contributed to the development of a financial markets course approved by BankSeta (Banking Sector Education and Training Authority) at NQF level 6 in South Africa.
, , , , , , , , , ,
Back to Top