The US labor market report (Non Farm Payrolls) published on the first Friday of each month was also eagerly awaited last week. The labor market data published earlier in the week (JOLTS report, ADP labor market data, initial jobless claims) had raised hopes that the \u201cbig\u201d labor market report on Friday afternoon could also signal a slowdown, which was one of the reasons for the rally on Tuesday and Wednesday. At 272,000, the number of newly created jobs (non-farm payrolls) was well above expectations of 182,000, however, signaling a continued robust labour market. However, the unemployment rate rose by 0.1% to 4.0%. As an immediate reaction to the NFP data, the US dollar showed strength, precious metal prices fell significantly and US government bond yields rose sharply (and bond prices fell). S&P 500 futures also came under pressure briefly before the US markets opened but, unlike bonds, quickly stabilized again.<\/p>\n\n\n\n
<\/a>Pressure on Fed increases after ECB rate cut<\/h2>\n\n\n\nThe European Central Bank (ECB) announced its first interest rate cut on Thursday. The reduction of the key interest rate in the eurozone to 4.25% also increases the pressure on the Fed, as it would not be in the interests of the US central bank to allow interest rates to diverge too much. With the weak labor market data from Tuesday to Thursday, hopes rose that the NFP data on Friday could finally give the green light. Despite the stronger labor market report on Friday, however, the consensus opinion is virtually unchanged and at least one, possibly two interest rate hikes are expected in the current year. However, some uncertainty remains and the upcoming inflation and labor market data as well as the Fed's statements are likely to cause some nervousness again.<\/p>\n\n\n\n
<\/a>S&P 500 chart picture unchanged<\/h2>\n\n\n\nThere has been little change in the technical chart of the S&P 500 Index. The upward trend is unbroken. However, the latest attempt to break out to a new high was not followed by any immediate follow-on buying. After the index reached another all-time high on Friday, prices retreated until the close of trading and a candlestick reversal signal emerged. In the short term, it is therefore not unlikely that the S&P 500 will go into correction mode again. Should this happen, the next important support level will be in the area of the upward trend line.<\/p>\n\n\n\n![\"\"](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2024\/06\/word-image-51070-1.png\")
<\/figure>\n\n\n\nS&P 500 daily chart<\/p>\n\n\n\n
<\/a>Mixed signals from the intermarket analysis<\/h2>\n\n\n\nThe Advance Decline Line reliably announced the new highs in the S&P 500 in May at an early stage. However, when the S&P 500 broke out last week, the AD Line did not follow suit, but instead showed weakness. (This means that more stocks fell than rose on the New York Stock Exchange). This underpins the scenario of a possible short-term correction. However, the Advance Decline Line is also in a clear upward trend.<\/p>\n\n\n\n![\"\"](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2024\/06\/word-image-51070-2.png\")
<\/figure>\n\n\n\nAdvance Decline Line Tageschart<\/p>\n\n\n\n
Another short-term negative signal is the relative weakness of small caps and mid caps last week. Both the S&P 400 Mid Cap Index, the S&P 600 Small Cap Index and the Russell 2000 ended the week down. Relative weakness in small caps is often a negative signal for the broader market.<\/p>\n\n\n\n
In terms of the performance of the individual market sectors of the S&P 500, however, we have seen a rotation over the last five days, indicating that capital is increasingly flowing from defensive to offensive sectors. The major offensive market sectors such as technology (XLK), consumer discretionary (XLY) and communication services (XLC) were among the leading sectors. Among the defensive sectors, the weakness of utilities (XLU) is particularly striking.<\/p>\n\n\n\n![\"\"](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2024\/06\/word-image-51070-3.png\")
<\/figure>\n\n\n\nPerformance of the market sectors of the S&P 500 (June 03 - June 07)<\/p>\n\n\n\n
How a trader or investor deals with the current situation certainly depends on the specific strategy. The medium to long-term picture remains bullish. Setbacks therefore primarily represent buying opportunities. If the base scenario of one or two interest rate cuts by the Fed this year comes true, this should give the market a tailwind. The US elections in September, which could potentially cause short-term volatility, should also not be forgotten. Analyzing intermarket signals can provide important early indications of the \u201cinner constitution\u201d of the market.<\/p>\n\n\n\n
There has been little change in the technical chart of the S&P 500 Index. The upward trend is unbroken. However, the latest attempt to break out to a new high was not followed by any immediate follow-on buying. After the index reached another all-time high on Friday, prices retreated until the close of trading and a candlestick reversal signal emerged. In the short term, it is therefore not unlikely that the S&P 500 will go into correction mode again. Should this happen, the next important support level will be in the area of the upward trend line.<\/p>\n\n\n\n S&P 500 daily chart<\/p>\n\n\n\n The Advance Decline Line reliably announced the new highs in the S&P 500 in May at an early stage. However, when the S&P 500 broke out last week, the AD Line did not follow suit, but instead showed weakness. (This means that more stocks fell than rose on the New York Stock Exchange). This underpins the scenario of a possible short-term correction. However, the Advance Decline Line is also in a clear upward trend.<\/p>\n\n\n\n Advance Decline Line Tageschart<\/p>\n\n\n\n Another short-term negative signal is the relative weakness of small caps and mid caps last week. Both the S&P 400 Mid Cap Index, the S&P 600 Small Cap Index and the Russell 2000 ended the week down. Relative weakness in small caps is often a negative signal for the broader market.<\/p>\n\n\n\n In terms of the performance of the individual market sectors of the S&P 500, however, we have seen a rotation over the last five days, indicating that capital is increasingly flowing from defensive to offensive sectors. The major offensive market sectors such as technology (XLK), consumer discretionary (XLY) and communication services (XLC) were among the leading sectors. Among the defensive sectors, the weakness of utilities (XLU) is particularly striking.<\/p>\n\n\n\n Performance of the market sectors of the S&P 500 (June 03 - June 07)<\/p>\n\n\n\n How a trader or investor deals with the current situation certainly depends on the specific strategy. The medium to long-term picture remains bullish. Setbacks therefore primarily represent buying opportunities. If the base scenario of one or two interest rate cuts by the Fed this year comes true, this should give the market a tailwind. The US elections in September, which could potentially cause short-term volatility, should also not be forgotten. Analyzing intermarket signals can provide important early indications of the \u201cinner constitution\u201d of the market.<\/p>\n\n\n\n<\/figure>\n\n\n\n<\/a>Mixed signals from the intermarket analysis<\/h2>\n\n\n\n
<\/figure>\n\n\n\n<\/figure>\n\n\n\n