S&P500 (SPX) Price Analysis – Jan 17, 2025
Daily Price Outlook
The global market sentiment has been flashing red and remains under pressure, influencing major equity indices, including the S&P 500. The index is currently trading at 5,937, after hitting an intraday low of 5,930.
Investors are increasingly cautious as weaker-than-expected US economic data and persistent inflation concerns weigh on market confidence. These developments have reignited speculation over Federal Reserve policy shifts, adding uncertainty to the financial markets.
Meanwhile, the weaker US Retail Sales data and mixed inflation readings have sparked a selloff in US equities. Moreover, the Federal Reserve’s Beige Book revealed modest economic activity, with strong holiday sales counterbalanced by declining manufacturing output.
The bearish sentiment is further exacerbated by Federal Reserve rate cut expectations, which have put pressure on Treasury yields, dragging them lower for the week.
Fed Rate Cut Speculation and Economic Uncertainty
On the US front, the growing expectations that the Federal Reserve will implement two interest rate cuts in 2024 have significantly impacted investor sentiment. The US Dollar Index (DXY) halted its losing streak but remains under pressure, reflecting mixed economic signals.
Fed policymakers continue to signal confidence in the labor market's resilience, as highlighted by Chicago Federal Reserve Bank President Austan Goolsbee.
However, the mixed inflation outlook, with a monthly Core CPI increase of just 0.2% in December, has left investors speculating about the timing and extent of rate adjustments.
This uncertainty is driving volatility in the S&P 500 as market participants weigh the risks of an economic slowdown against the potential benefits of lower interest rates.
Geopolitical and International Developments
Apart from this, the global events are also weighing on the S&P 500. In China, fourth-quarter GDP growth matched expectations at 1.6% QoQ, while December Retail Sales and Industrial Production outperformed forecasts.
However, the National Bureau of Statistics noted that challenges persist due to insufficient domestic demand and external economic pressures. These mixed signals from the world’s second-largest economy add to the market’s cautious tone.
Meanwhile, geopolitical tensions have shown signs of easing, with Israeli Prime Minister Benjamin Netanyahu announcing a ceasefire agreement to pause a prolonged conflict. However, the broader implications for energy markets and regional stability remain uncertain.
S&P 500 – Technical Analysis
The S&P 500 index (SPX) is trading at 5937.35, down 0.21%, as it hovers below the pivot point at 5962.43.
The index is under pressure amid cautious market sentiment, with immediate resistance seen at 6021.13, followed by higher levels at 6099.55 and 6165.39.
On the downside, support is firmly established at 5873.95, with deeper levels at 5781.13 and 5705.34 offering further stability.
The 50-day EMA at 5959.73 is currently acting as a near-term ceiling, limiting bullish momentum. Failure to reclaim the pivot point could signal continued bearish sentiment, potentially driving the index toward immediate support at 5873.95. Conversely, a sustained move above 5962.43 may shift sentiment, targeting resistance at 6021.13.
From a technical perspective, the broader trend remains cautious, with the index consolidating within a tight range.
A break below 5873.95 would confirm a bearish bias, likely leading to further declines toward 5781.13. On the upside, overcoming the resistance at 5962.43 could open the path to 6021.13, supported by improved market sentiment.
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