Wednesday marked a positive close for the S&P 500 and Nasdaq, notwithstanding the deceleration in growth of the U.S. services sector in March. The market's gains were moderated by Federal Reserve Chair Jerome Powell's indications that an interest rate cut is not imminent.
Fed's Opinion On Rate Decision
Powell reaffirmed the Federal Reserve's prudent position, emphasizing a wait-and-see methodology in light of the persistent robustness of the United States economy and the recent inflation data that have surpassed initial projections.
Initial forecasts indicated that the U.S. central bank might reduce interest rates as early as June; however, optimistic economic indicators have generated conjecture regarding the precise moment.
Raphael Bostic, president of the Federal Reserve Bank of Atlanta, told CNBC that implementing rate reductions might not be prudent until the fourth quarter of the current year.
Sierra Investment Management's chief investment officer, James St. Aubin, provided an account of a complex data environment in which favorable economic indicators might, inexplicably, cause market unease.
US PMIs Provided A Mixed Data
In March, the Institute for Supply Management reported that the non-manufacturing PMI had declined to 51.4, the second consecutive monthly decline since February's 52.6. The reading fell shy of the expectations of analysts.
While the services sector, which constitutes a substantial proportion of the economy, maintains growth with a reading exceeding 50, the expansion rate seems moderate.
Investors await the Non-farm payroll, which might work as a key price driver of the Stock market.
S&P 500(SPX500) Technical Analysis
In the daily chart of the S&P500, a clear bullish trend is visible, supported by rising moving averages. The near-term support level is at the 5178.57 level, where the recent candle hovers with a sideways momentum.
In this market structure, investors should closely monitor how the SP500 price trades within the 5262.76 to 5178.57 price area, where a bullish break above the double top line could resume the existing trend toward the 5500.00 level.
On the other hand, a break below the 5100.00 psychological level could initiate a bearish correction towards the 5000.00 area.
