S&P 500 is climbing upwardsS&P 500 is climbing upwards
The market’s move reflects ongoing digestion of mixed US economic data, supportive seasonality, and cautious optimism among investors.
US Economic Data Highlights
Data provided a mixed snapshot of the US economy, contributing to the market’s recent fluctuations:
- **Chicago Fed National Activity Index (Oct):** Fell to -0.40, below the expected -0.2.
- **Dallas Fed Manufacturing Index (Nov):** Came in at -2.7, worse than the forecast of -2.4.
- **New Home Sales (Oct):** Declined to 0.61M, significantly missing expectations of 0.73M.
- **Richmond Fed Manufacturing Index (Nov):** Plunged to -14, below the forecast of -10.
- **Durable Goods Orders (Oct):** Increased by just 0.2%, underperforming the 0.5% forecast.
- **Initial Jobless Claims (Nov 23):** Reported at 213K, slightly better than expected (216K), but still pointing to a resilient labor market.
- **Chicago PMI (Nov):** Dropped to 40.2, well below the anticipated 44, highlighting weakness in manufacturing.
Market Sentiment and Seasonality
Seasonality continues to work in favor of the S&P 500, as historical trends during this period often support equities. The **Fear & Greed Index**, currently at **64 points**, reflects moderate optimism and a "Greed" sentiment, which typically aligns with risk-on behavior in the markets.
Rate Cut Expectations
Markets remain focused on the Federal Reserve’s upcoming meeting on **December 18th**, with a **66,3%% probability** currently priced in for a **25 basis-point rate cut**. Such a move could provide additional support for equities by easing financial conditions, though its long-term impact remains uncertain.
Geopolitical Risks
While market sentiment has improved slightly, risks remain in the background. The ongoing war in Ukraine continues to pose threats to global stability, with potential knock-on effects on energy prices, supply chains, and economic performance.
Long-Term Trend Intact, but Volatility Likely
The S&P 500’s long-term upward trend remains intact, bolstered by supportive seasonality, stable GDP growth, and investor optimism. However, the current environment of mixed economic data and rising policy uncertainty suggests that market volatility could persist in the short term.
Broader Context
27.11 data underscored a steady but moderating US economy, while forward-looking risks remain:
- **Global Economic Outlook:** The S&P Global forecast anticipates global GDP growth of approximately 3% by 2025, with US growth slowing to below 2% next year and China toward 4%.
- **US Policy Risks:** Potential policy shifts under the new administration could elevate inflation pressures and tighten financial conditions, introducing further uncertainty for equity markets.
Implications for S&P 500
Today’s modest gain shows resilience in the face of mixed signals from economic data and global risks. With supportive seasonality and a strong likelihood of a December rate cut, the S&P 500 may find short-term support. However, investors should remain vigilant, as volatility is likely to persist amid policy uncertainties and geopolitical risks.
What’s your outlook for the S&P 500 after today’s rebound? Can the market sustain its gains, or will headwinds from mixed data and global risks take over? Share your thoughts in the comments!
