S&P 500 Analysis: Worrisome Dynamics Ahead of Fed Decision

On the first of May, the US stock market turned out to be optimistic: the S&P 500 index exceeded the April maximum and approached the February maximum. The growth of the weekend was facilitated by the resolution of the crisis with the First Republic bank, which was bought by JPMorgan. According to former Treasury Secretary Larry Summers, most of the problems in the banking sector are over.

The opinion of Fundstrat analysts added to the positive. They indicated that the S&P 500 is up 9% YTD, has been in an uptrend for the past 7 months and has posted 2 quarters of growth in a row. This has never happened in a bear market, and according to the statistics, it is over. Analysts expect the index to return to highs at 4,750 by early 2024.

However… Yesterday, May 2, weak Job Openings data was published (actual – 9.59 million open vacancies, forecast – 9.74M, a month ago – 9.97M, a year ago – 11.5M). The sharp decline in supply in the US labor market led to a fall in stock prices and a rise in gold prices — presumably, investors preferred safer gold over stocks, as their fears of a recession intensified again against the backdrop of a weak labor market.

At the same time, the chart shows that the key resistance at 4170 continues to be relevant (as we wrote earlier, this level originates as early as 2022).

As a reminder, today we expect:

→ US release Fed interest rate decision at 21:00 (GMT+3)

→ Press conference US Federal Open Market Committee (FOMC) at 21:30 (GMT+3)

Get ready for bursts of volatility. Perhaps yesterday's bearish dynamics will intensify, and there will be no trace of the May Day positive.

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