The meeting of the US Federal Reserve took place on Wednesday. As expected, interest rates were not yet lowered. In the subsequent press conference, Fed Chairman Jerome Powell once again emphasized that the decisions for the remaining meetings this year have not yet been made and are still data-dependent. However, even before the July meeting, the market expected that the first interest rate hike would most likely take place in September. As inflation data has shown a continuing trend towards disinflation in recent weeks and months, the focus has recently shifted increasingly to economic and labor market data.<\/p>\n\n\n\n
<\/a>Labor market cools: Did the Fed wait too long?<\/h2>\n\n\n\nOne problem with this is the following: The Fed's measures always have a delayed impact on the real economy. In addition, the data used by the Fed as a basis for its decisions are usually indicators that reflect the past.<\/p>\n\n\n\n
The danger that the monetary authorities will lag behind real developments and therefore miss the \"right\" time to raise interest rates is more than just a fear. The Fed has proven several times in the past that the motto seems to be: \"Let's wait until something breaks.\" The reason for the hesitation was and is the continuing danger that inflation will return.<\/p>\n\n\n\n
Fears that the Fed has already missed the right time for the first interest rate hike increased on Friday afternoon with the publication of the labor market data, which led to significant downward pressure on the stock markets.<\/p>\n\n\n\n
At 114,000, the number of newly created non-farm payrolls was well below the expected figure of 176,000 and below the previous month's figure of 179,000. The latter was also revised downwards after the originally published figure of 206,000. Furthermore, the unemployment rate rose unexpectedly from 4.1 % to 4.3 %.<\/p>\n\n\n\n
The popular phrase \"soft economic landing\" therefore seems to be called into question, at least by some market participants, and warnings of a possible recession have become louder. The increased risk of recession is also reflected in the sharp rise in bond prices.<\/p>\n\n\n\n
If the economic and labor market data published in the coming weeks do not signal a completely contrary development, at least one thing is clear: the Fed will cut interest rates in September. According to the CME's FedWatch tool, a rate cut of 50 basis points is now even possible. The probability of this is currently 22 %. By the end of the year, at least three interest rate cuts are now expected rather than 2-3.<\/p>\n\n\n\n
<\/a>S&P 500 at important support zone<\/h2>\n\n\n\nEven if the downward pressure on the S&P 500 increased briefly, it should be noted: We are still in a bull market. The primary uptrend is fully intact and the signals from the market breadth continue to support the bull case. From a market technical and sentiment perspective, such short-term sell-offs often pave the way for a renewed rally. Looking at the weekly chart, you can see that the correction has so far only reached the weekly EMA 20.<\/p>\n\n\n\n![\"S&P](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2024\/08\/word-image-53544-1.png\")
<\/figure>\n\n\n\nS&P 500 weekly chart with EMA 20 (purple) and EMA\/SMA 50 (green)<\/p>\n\n\n\n
As you can see on the daily chart below, the upward trend line has been broken downwards. This is not a positive signal for the time being and the chart picture has therefore clouded over in the short term. However, the S&P 500 is still well supported on the downside. There is a support zone at 5300 points, which is generated from the weekly EMA 20 and the short-term local high from May 2024. Should this support area fail to hold, there is another important support zone at 5250.<\/p>\n\n\n\n![\"S&P](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2024\/08\/word-image-53544-2.png\")
<\/figure>\n\n\n\nS&P 500 daily chart<\/p>\n\n\n\n
For a possible bullish scenario to play out, however, the S&P 500 should first show a clear price reaction. In addition to a subordinate trend reversal, the upward volume should increase significantly again. Until buyers return, the situation will remain tense.<\/p>\n\n\n\n
Even if the downward pressure on the S&P 500 increased briefly, it should be noted: We are still in a bull market. The primary uptrend is fully intact and the signals from the market breadth continue to support the bull case. From a market technical and sentiment perspective, such short-term sell-offs often pave the way for a renewed rally. Looking at the weekly chart, you can see that the correction has so far only reached the weekly EMA 20.<\/p>\n\n\n\n S&P 500 weekly chart with EMA 20 (purple) and EMA\/SMA 50 (green)<\/p>\n\n\n\n As you can see on the daily chart below, the upward trend line has been broken downwards. This is not a positive signal for the time being and the chart picture has therefore clouded over in the short term. However, the S&P 500 is still well supported on the downside. There is a support zone at 5300 points, which is generated from the weekly EMA 20 and the short-term local high from May 2024. Should this support area fail to hold, there is another important support zone at 5250.<\/p>\n\n\n\n S&P 500 daily chart<\/p>\n\n\n\n For a possible bullish scenario to play out, however, the S&P 500 should first show a clear price reaction. In addition to a subordinate trend reversal, the upward volume should increase significantly again. Until buyers return, the situation will remain tense.<\/p>\n\n\n\n<\/figure>\n\n\n\n<\/figure>\n\n\n\n