S&P500 (SPX) Price Analysis – Feb 21, 2025

Daily Price Outlook

During the latest trading session, the S&P 500 (SPX) Index struggled to halt its bearish trend, remaining under pressure around the 6,117 level and hitting an intra-day low of 6,084. The downward momentum was driven by cautious investor sentiment amid economic uncertainties and shifting Federal Reserve expectations.

Stronger US Dollar and Fed’s Cautious Stance Keep S&P 500 Under Pressure

On the US front, the broad-based US Dollar remained strong, with the Dollar Index (DXY) hovering around 106.50, despite higher-than-expected jobless claims rising to 219,000.

However, weak economic data usually pressures a currency, the USD gained support as investors sought safety amid uncertainty. Moreover, Federal Reserve officials maintained a cautious stance on inflation, signaling that interest rates may stay higher for longer, which further boosted the greenback.

St. Louis Fed President Alberto Musalem also raised concerns about stagflation risks, while Atlanta Fed President Raphael Bostic suggested that rate cuts remain possible this year, depending on upcoming economic data.

Meanwhile, the recent FOMC meeting minutes revealed the Fed's cautious approach, reinforcing expectations that interest rate reductions may be delayed. As a result, the S&P 500 faced selling pressure, as higher interest rate concerns dampened investor sentiment.

Impact of S&P Global PMI Data on the US Dollar and Equities

Moving ahead, the latest S&P Global PMI data for February played a crucial role in market movements. Investors closely watched the preliminary US Manufacturing and Services PMIs, which offered insights into economic activity.

The Manufacturing PMI was expected to edge higher from 51.2 to 51.5, while the Services PMI was anticipated to rise from 52.9 to 53.0.

However, the stronger-than-expected services sector performance could provide some support to the US Dollar, adding pressure on equities, including the S&P 500. However, if the Services PMI unexpectedly dips below 50, signaling economic contraction, the market could witness a shift in sentiment.

Apart from this, concerns about rising input costs in the service sector and a resilient labor market could reinforce expectations of a “higher for longer” Federal Reserve stance, further limiting the upside for stocks.

Geopolitical Tensions and Trade Uncertainty Weigh on Market Sentiment

Apart from economic data, geopolitical factors also played a role in the S&P 500’s decline. The global trade environment remains uncertain, with potential tariff policies adding pressure on financial markets.

Former US President Donald Trump confirmed a 25% tariff on pharmaceutical and semiconductor imports starting in April, alongside continued auto tariffs. These developments fueled concerns about trade tensions, leading to increased market volatility.

Despite the ongoing pressure, traders are closely monitoring upcoming economic releases and central bank commentary for further direction. If US economic indicators continue to show resilience, the S&P 500 may struggle to recover in the near term.

However, any signs of easing inflationary pressures or a shift in Fed policy expectations could provide temporary relief to the index.

S&P 500 – Technical Analysis

The S&P 500 (SPX) is trading at $6,117.51, slightly down by 0.01%, reflecting a cautious market sentiment. Despite the minor decline, the index remains above the key pivot point at $6,093.87, maintaining a bullish outlook as long as it holds above this level.

The pivot point is a crucial support zone, bolstered by the 50-Day Exponential Moving Average (EMA) at $6,057.00, which is providing dynamic support.

If the S&P 500 continues to trade above the pivot point, it is likely to target the immediate resistance at $6,128.99.

Breaking above this resistance could fuel further bullish momentum towards the next resistance levels at $6,171.70 and $6,219.27. These levels are significant as they mark potential breakout zones that could lead to new highs.

On the flip side, if the index falls below the pivot point at $6,093.87, it could encounter selling pressure, pushing it down to the immediate support at $6,049.53.

A break below this level would expose the next support zones at $6,008.89 and $5,969.55. These supports are critical in preventing a deeper correction and maintaining the long-term bullish trend.

From a strategic perspective, the recommended entry point is to buy above $6,094, targeting a take profit at $6,172 while setting a stop loss at $6,049 to manage downside risk. This approach aligns with the bullish sentiment supported by the upward trendline and the 50 EMA.

Related News

- GOLD Price Analysis – Feb 21, 2025

- EUR/USD Price Analysis – Feb 21, 2025

- S&P500 (SPX) Price Analysis – Feb 14, 2025