S&P500 (SPX) Price Analysis – Jan 03, 2025
Daily Price Outlook
The S&P 500 index is currently facing significant losses, dropping to the 5,868 level and hitting an intra-day low of 5,829.
This downturn marks a sharp shift from its previous bullish performance and has raised concerns among investors.
The bearish trend can be attributed to a combination of factors, including geopolitical tensions, economic data, and uncertainty surrounding future Federal Reserve policies.
Geopolitical Instability Driving Bearish Performance in the S&P 500
However, the major reason behind the bearish performance of the S&P 500 is the ongoing geopolitical instability, particularly the escalating tensions in the Middle East and the ongoing Russia-Ukraine conflict.
These events are creating uncertainty, leading investors to shift their focus toward safe-haven assets like gold and the US dollar. As global risks rise, market sentiment tends to sour, causing stocks in broad indices like the S&P 500 to face significant declines.
These geopolitical risks are not only creating volatility in specific sectors but also clouding the global economic outlook.
The uncertainty surrounding these events makes it difficult for investors to gauge the future direction of the market, resulting in heightened caution and risk aversion.
As a result, investors are pulling back from riskier assets, contributing to the bearish movement of the S&P 500.
US Economic Uncertainty and Strong Dollar Contributing to S&P 500's Bearish Outlook
In addition to geopolitical tensions, there are growing concerns about the state of the US economy. The Federal Reserve's recent projections have raised alarm bells, as they indicate fewer rate cuts in 2025 due to ongoing inflationary pressures.
This uncertainty surrounding future monetary policy has led to a cautious approach among investors. When inflation remains persistent, the central bank may opt for a more aggressive stance on interest rates, which could further weigh on stocks.
Furthermore, positive job data, such as the recent lower-than-expected Jobless Claims report, has led to a stronger US dollar, which, while good for the greenback, is exerting downward pressure on assets like the S&P 500.
As the dollar strengthens, it puts a strain on the global demand for US-based assets, which is another contributing factor to the index’s bearish performance.
S&P 500 – Technical Analysis
The S&P 500 (SPX) is trading at 5868.56, down 0.22%, as it struggles to recover above its pivot point of 5933.60.
The index remains under bearish pressure, with immediate resistance levels at 6011.99 and 6099.55.
On the downside, critical support levels are at 5770.88, 5696.90, and 5617.62, which may help stabilize the index if selling pressure persists.
Technical indicators suggest cautious sentiment. The RSI at 38 indicates oversold conditions, potentially attracting short-term buyers, though a sustained reversal remains uncertain. The 50-day EMA at 5970.89 acts as a key resistance level, reflecting the ongoing downward bias.
A move above the immediate support at 5770.88 could shift the outlook toward consolidation.
However, for a decisive shift to bullish momentum, the SPX must break and sustain above the pivot point at 5933.60. Failure to hold support at 5770.88 may lead to extended losses toward 5696.90 or lower.
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