The S&P 500 broad market index futures
have surged by 3.6% this week to 5,543 points, marking an impressive recovery.
This rise has erased the losses incurred following the release of the U.S. July
labor market report, bringing the benchmark close to entering the green zone
above 5,564 points, which would mark a positive trend since the beginning of
August. If the upward momentum continues, this week could set a record for
S&P 500 index growth since October 2023. The index has already rebounded
nearly 9.0% since hitting a low of 5,089 points on August 5.
The volatility in the market has been stark,
with the index dropping 10.0% followed by a swift 9.0% recovery in just a few
weeks. This volatility has become less surprising to investors, particularly
after July inflation data showed signs of slowing inflation in the U.S.
Producer prices declined more than expected, while consumer prices dropped to
2.9% year-over-year, with core inflation decreasing to 3.2%, aligning with
analysts' expectations. These developments led to a 0.6% gain in the S&P
500 index.
The market saw another significant boost of
1.7% on Thursday following the release of better-than-expected July retail
sales and Initial Jobless Claims data. These positive readings have eased
recession fears in the U.S., as confirmed by the CME FedWatch Tool data, which
shows a decrease in bets on a 0.50 percentage point interest rate cut by the
Federal Reserve (Fed) in September, dropping from 55.0% to 25.0% since the end
of last week. Investors now believe the Fed has ample time to make measured
decisions, rather than rushing into rate cuts.
The benchmark is still gravitating to the 5550
resistance level ahead of the next week. FOMC Minutes release and Jackson Hole
meeting of central bankers promise to add some positive tunes to the market
symphony. However, investors could be too fascinated by interest rates cuts
perspectives that could play some tricks with the investing crowd.
Technically, the S&P 500 index outlook is worsening.
The benchmark hit its primary upside targets at 5450-5550 that should be met by
mid-September. This rapid climbing is leading to rising overbought tensions. Immediate
resistance lies at 5540-5560 points, with support at 5420-5440 points.
In the oil market, Brent crude oil prices are
retesting the $79.00-81.00 per barrel support level, with a pullback observed
on Friday. The next key level for Brent is at $70.00-72.00 per barrel. While
the period that was technically favorable for oil price declines has ended, a
sharp decline from current levels is unlikely.
Gold has achieved its mid-term targets of
$2,000-2,100 per ounce, with a potential for further consolidation within the
$2,400-2,500 range in August. The immediate resistance for gold lies at
$2,490-2,510, with support at $2,390-2,410.
The EUR/USD pair has reached its primary
upside targets at 1.10000-1.11000 before slightly retreating. This movement
increases the likelihood of an upside scenario with extreme targets at
1.14000-1.15000. To activate this scenario, the pair would need to climb above
the 1.11000 level.