S&P 500 Index Hits Record After Major News

FXOpen

Yesterday, significant news regarding US inflation was released. According to ForexFactory:
→ Year-on-year Consumer Price Index (CPI): actual = 3.3%, forecast = 3.4%, previous = 3.4%;
→ Month-on-month CPI: actual = 0.0%, forecast = 0.1%, previous = 0.3%;
→ Month-on-month Core CPI (excluding food and energy): actual = 0.2%, forecast = 0.3%, previous = 0.3%.

These official figures indicate that US inflation is slowing down.

This bolstered expectations that the current tight monetary policy might ease. Consequently:
→ the dollar weakened (as we anticipated yesterday while analysing the USD/CAD chart);
→ stock markets surged. Notably, the S&P 500 index (US SPX 500 mini on FXOpen) surpassed 5,444, rising approximately 1.1% within two hours following the inflation news release.

Later that day, the Fed's rate decision and Powell's press conference took place:
→ the Fed rate remained unchanged at 5.5% (as expected);
→ Jerome Powell signalled a possible rate cut before the end of the year, hinting at the possibility of two cuts.

Today's technical analysis of the S&P 500 index (US SPX 500 mini on FXOpen) shows that:
→ the market is moving within an ascending channel (shown in blue);
→ before the news release, the price was near the channel’s median, but it rose towards the upper boundary in the evening;
→ the price crossed the psychological level of 5400, and the RSI entered overbought territory.

Will the rally continue? As the chart shows, the decline from B to C is less than 50% of the rise from A to B, which can be interpreted as a normal correction within an uptrend.

However, the sustainability of this trend will depend on the S&P 500 index (US SPX 500 mini on FXOpen) maintaining its position above 5400. Note the 5300 level: it acted as support from 16-22 May but became resistance on 3-4 June.

Support for bulls in keeping the price above 5400 could come from the median line and more dovish news regarding inflation and Fed rates.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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