S&P 500 is treading water at a fresh six week low and is headed to official correction territory as attention is returning to fiscal assistance given a loss of momentum in the economic data and the surge in COVID-19, FXStreet’s Ross J. Burland reports.
Key quotes
“With researchers around the world racing to develop a vaccine, the optimism has dimmed and investors have been spooked by the spike in new coronavirus cases in several European countries. This has encouraged some profit-taking, adjustments and rotation between sectors, or a rebalancing act between the biggest weights in the market to the smallest weights.”
“Attention returns to the prospects of more fiscal assistance given a loss of momentum in the economic data. The problem lies with Senate Republicans. The equity rally and President Trump’s executive orders have bought them time but the question is whether it will take a steeper stock market correction or acceleration in unemployment to spark action. The froth of the markets has been swiped off partly due to the highly anticipated Federal Reserve meeting that eventualised into a slightly less dovish than hoped for outcome.”
“What the stock markets want to see is an enactment of the sort of package that President Trump or Speaker Pelosi have both endorsed, although Washington’s deadlock means hopes are waning for cash-strapped states. As such, this is undermining growth prospects in the last quarter for 2020.”
“The focus for the week will be on a flurry of Fed speakers, starting with Chair Powell testifying to a congressional subcommittee on the central bank’s response to the pandemic. Mester and Rosengren will also be speaking at virtual events. However, as far as details on the new average inflation target go, it appears that the US stock market will have to be satisfied with the vague wording we got in the September meeting.”
“The S&P 500 is already crossing below its uptrend and it is now close to a 10% decline from the peak. A 10% fall is commonly viewed by market technicians as an official correction. The structure to watch for is the 61.8% Fibonacci around 3200 to the downside.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up. The pair traded at 0.6518.
EUR/USD mired near 1.0730 after choppy Thursday market session
EUR/USD whipsawed somewhat on Thursday, and the pair is heading into Friday's early session near 1.0730 after a back-and-forth session and complicated US data that vexed rate cut hopes.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: Slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.