Key Points:
The S&P 500 (Symbol: SP500) concluded a tumultuous August with a respectable 3.7% gain, overcoming a month characterised by market swings and bouts of panic selling. The tech-heavy Nasdaq Composite (Symbol: NAS100) and the Dow Jones Industrial Average (Symbol: DJ30) also saw gains of 3% each.
Picture: Despite down for the week by 0.2%, S&P 500 wraps up August with gains, as observed on the VT Markets app.
Looking at the index’s performance over the last two years, the S&P 500 has shown resilience over the past few months, continuing its upward trajectory despite intermittent pullbacks. The weekly chart reveals a consistent uptrend since the lows of late 2022, with the index now hovering near its recent highs around 5,677.
The moving averages (EMA 24, 72) have maintained a bullish alignment, with the shorter-term average positioned above the longer-term one, further reinforcing the ongoing bullish sentiment. The MACD also supports this narrative, showing positive momentum as the histogram bars remain above the zero line, although the recent narrowing suggests a potential consolidation phase.
However, despite the bullish technical setup, the S&P 500’s recent performance is not without its challenges. The index closed at 5,648.63, down 0.2% for the week, indicating some hesitation among market participants as they weigh the prospects of continued economic growth against potential headwinds.
Market participants are likely cautious ahead of key economic data releases and Federal Reserve policy decisions. The slight decline this week could be attributed to profit-taking or a defensive posture ahead of anticipated events that could impact market sentiment.
One of the most anticipated events is the Federal Reserve’s upcoming rate decision on September 18. With the Fed Funds Rate sitting at a 23-year high of 5.5%, market consensus currently leans towards a 25 basis point (bps) cut. However, there is a significant one-third minority among analysts who foresee a more aggressive 50bps cut.
The S&P 500’s strong performance last month suggests that market sentiment is still cautiously optimistic, but the looming interest rate decision could introduce a fresh wave of volatility.
Traders should pay close attention to the U.S. jobs report set to release on the first Friday of September, which is likely to influence the Fed’s policy decision.
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As September unfolds, traders will need to stay disciplined in risk management, keeping a close eye on key economic data releases and Fed commentary. The potential for increased market volatility could create attractive entry and exit points for those prepared to act quickly.
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