S&P 500 Gains on Tech Stocks, Anticipates Key Economic Data Amid Market Optimism

The S&P 500 closed higher on Monday, driven by technology stocks, as the market began the second half of the year positively, despite slim trading volumes ahead of the July 4 holiday and anticipation of key payroll data and the Fed’s June meeting minutes. With the first quarter 2024 earnings season concluded, focus shifts to economic data, including the ISM manufacturing index on Monday, the JOLTS job openings report on Tuesday, and the nonfarm payrolls (NFP) report on Friday. Additionally, the minutes from the June FOMC meeting will be released on Wednesday.

On last Thursday, Nvidia's losses impacted both the S&P 500 and the Nasdaq Composite, which fell by 0.3% and 0.8%, respectively, while the Dow Jones Industrial Average gained 0.8%, marking its best day last month. 

Investor optimism about potential rate cuts bolstered stock markets, with technology stocks leading the charge. Tesla rose 6% before its second-quarter delivery report, and Nvidia increased by 1% after Morgan Stanley raised its price target. Tesla's Q2 deliveries are expected to show a slight rebound, approaching the estimate of 435,000 units. Paramount Global climbed 3% after reports of a possible bid by billionaire Barry Diller.

Microsoft reclaimed its position as the world’s most valuable company after Nvidia's shares fell over 3%. Nvidia's market value dropped to $3.21 trillion, while Microsoft’s slipped to $3.31 trillion. Nvidia, Microsoft, and Apple are competing for the top market value spot, with Nvidia expected to double its revenues this fiscal year due to its leading role in AI technology. Boeing's stock rose nearly 3% after agreeing to buy Spirit Aerosystems for $4.7 billion, resolving complications related to Spirit's contracts with Airbus.

Bank of America strategists predict a robust second half of 2024 for the S&P 500 following a strong first half where the index rose 14.48%. Historically, when the S&P 500 performs well in the first half, it tends to continue this trend in the latter half, with positive returns in 74% of the instances since 1928. Specifically, in years with Presidential elections, a positive first half has led to an 88% chance of gains in the second half. However, for the S&P 500 to maintain its strength, it needs to stay above its 200-day moving average, which it has managed to do in the first half of 2024. If it does not, the expected returns drop significantly.

Deutsche Bank, however, warns of potential near-term volatility due to geopolitical and domestic political events, including upcoming elections and possible market disruptions. Citi analysts expect a slight increase in positive earnings surprises for Q2 2024, particularly in the tech sector, while value sectors like Energy and Utilities may face more negative surprises.

Upcoming quarterly earnings from CarMax, and June's manufacturing and services Purchasing Managers’ Index readings, will provide insights into the U.S. economy. Existing home sales data for May is also due for release.

Federal Reserve Chair Jerome Powell is expected to discuss the economy and inflation in a speech at a European Central Bank conference, and the Fed's meeting minutes will provide further insights into future rate cuts. Nonfarm payrolls data will be closely watched for its impact on labor market assessments and interest rate decisions, with traders currently betting on a rate cut by September.

Data for Technical Analysis (1D) CFD US 500 [S&P 500]

Resistance : 5478.4, 5486.4, 5499.5

Support : 5452.2, 5444.2, 5431.1                    

1D Outlook

Source: TradingView                                                            

Buy/Long 1 If the support at the price range 5422.2 - 5452.2 is touched, but the support at 5452.2 cannot be broken, the TP may be set around 5484.4 and the SL around 5407.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 5478.4 - 5508.4, TP may be set around 5523.0 and SL around 5437.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 5478.4 - 5508.4 is touched, but the resistance at 5478.4 cannot be broken, the TP may be set around 5450.2 and the SL around 5524.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 5422.2 - 5452.2, TP may be set around 5395.0 and SL around 5494.0, or up to the risk appetite.       

Pivot Points Jul 2, 2024 04:03AM GMT