Last week, the S&P 500 closed the second week in a row with losses of just over 1.5 %. The continuation of the correction was triggered in particular by renewed concerns about a rise in inflation.<\/p>\n\n\n\n
Consumer prices in the USA (Consumer Price Index) published last week were slightly higher than Wall Street had expected. The inflation rate for March amounted to 3.5 % on a YOY basis. (Expectations were 3.4 % after 3.2 % in February.) Although this is already significantly lower than in 2022, the CPI has been stagnating for several months and is not declining any further.<\/p>\n\n\n\n
Fewer interest rate cuts than expected<\/strong><\/h2>\n\n\n\n
The Fed's scope for interest rate cuts in the current year is therefore becoming smaller again. At the beginning of the year, expectations were still for five to six interest rate cuts. Currently, one to two rate cuts are being priced in for the current year. While the bond markets have come under significant pressure in recent weeks, the equity markets seem to be coping relatively well with the high interest rate level. However, if the inflation data in the coming months is again hotter than expected or signals an increase in inflation, it cannot be ruled out that interest rate hikes will suddenly be discussed again. In such a scenario, the stock markets are also likely to come under downward pressure. However, almost all central bankers are currently signaling that interest rate cuts are likely in the current year.<\/p>\n\n\n\n
Short-term support at 5100 points<\/strong><\/h2>\n\n\n\n
Meanwhile, the S&P 500 Index continued its correction. As can be seen on the chart below, the index fell to 5123 points. The lower Bollinger Band as well as the daily EMA and SMA 50 were tested and have so far been defended.<\/p>\n\n\n\n<\/figure>\n\n\n\n
S&P 500 daily chart<\/p>\n\n\n\n
If the short-term support area at around 5100 points does not hold, the correction is likely to continue. The next important support levels are around 5000 points (where the weekly EMA 20 is located) and 4800 points (horizontal support area and daily EMA 200).<\/p>\n\n\n\n<\/figure>\n\n\n\n
Even in the event of an extended correction, the overarching upward trend remains intact and opens up new opportunities to enter the long side. The market has risen virtually without interruption in recent weeks and months and was heavily overbought. A correction was long overdue and is healthy for the bull market in the medium term. <\/p>\n\n\n\n
Market breadth has also provided positive signals recently. The number of shares with new 52-week highs was still higher than the number of shares with new lows in the last two weeks. Around 72 % of all stocks in the S&P 500 are still trading above the 200-day line, and around 66 % on the New York Stock Exchange (NYSE). In terms of sector rotation, too, the offensive market sectors have led the way during the rally of recent weeks and months, with the defensive sectors bringing up the rear. This picture has not yet changed much. The technology sector in particular has shown relative strength in the last two weeks.<\/p>\n\n\n\n
Geopolitical risks<\/strong><\/h2>\n\n\n\n
At the time of writing, it is not yet clear how the stock markets will react on Monday to the events of the weekend. Iran's attack on Israel threatens to further escalate the situation in the Middle East. However, a military response from Iran was expected and has already been partially priced in over the last two weeks. If the indications of a de-escalation or no further escalation are confirmed in the new week, a positive price reaction could also follow in the course of the week. It is advisable to wait at least until Monday before the situation can be better assessed.<\/p>\n\n\n\n
![\"S&P](\"https:\/\/lh7-us.googleusercontent.com\/1E1fZZoNdhdexeRxkLE4Qq4zOxiu2QNUFxV4qzXTpFvvdITpwpM1nOnPdDcuwnVS_W_tI7WnO0sVrOU3LrEzRTvmKbICHi0yRTX6-2hnmnIhHI9wOVOea9flYubUpkTFR3LdQfxeJuBtU2i2IKF6BiE\")
<\/figure>\n\n\n\n![\"S&P](\"https:\/\/lh7-us.googleusercontent.com\/MFrUdkaAAX74MXh845U8FqCl1M44-XZ_fjrMjwL2jWVU6mEGqMKOde6PYw2za0iEXSizc75ukS-qRfRnAXukTMHHZPECe4O_jBAP60lqMDYjlU0HPdVv37ELimZowSiPBP__95yDBeg7ejwOiDq07UE\")
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