The S&P 500 index reached its highest peak of the year

Market participants await the outcome of the upcoming Federal Reserve meeting

By Raed Alkhedr | @raedalkhedr | 6 June 2023

S&P 500 TA2
  • Fitch Ratings has announced that it is reviewing the credit rating of US sovereign debt and there is a possibility of a downgrade

  • The S&P index has experienced a substantial increase of over 5% during the month

  • An ascending triangle pattern is currently forming on the index

The most important economic events affecting the S&P 500 index

After reaching its highest levels in 9 months, the S&P 500 index closed the first session of the week with a slight decline near the 4275-point level. This comes at a time when markets are anticipating whether the US Federal Reserve will temporarily halt interest rate hikes at its upcoming meeting or continue with monetary tightening.

In this context, James Bullard, a member of the Federal Reserve, previously stated that expectations of slowing inflation were positive but not guaranteed. He emphasized the need for continued vigilance from the Federal Reserve to combat inflation.

Furthermore, Bullard noted that despite the slowdown in both the core and overall personal consumption expenditure index since its peak levels in the United States last year, it still remains significantly high. He highlighted that the monetary policy of the Federal Reserve is in a better state following the interest rate hike.

On a different note, Fitch Ratings announced that it is keeping the credit rating of US sovereign debt under review with a possible downgrade. This decision comes amidst uncertainty regarding the US funding gap and debt.

Regarding the data, the US services purchasing managers' index dropped to 50.3 points in May, compared to the previous reading of 51.9 points in April.

The most important pivot and technical levels affecting the movements of the S&P 500 stock market index

The S&P 500, a broad-based US stock market index, has successfully surpassed the resistance level at 4170 points, which served as the upper limit of an ascending triangle pattern. Consequently, it has achieved a new peak for the year around the 4199 points level.

There is a likelihood that the index will continue its upward movement to test the resistance level at 4325 points. If it manages to surpass this level, we may anticipate further upward momentum towards a higher resistance level around 4500 points.

These projections are conditional upon the index maintaining stability above the 4170-points resistance level. In the event that the index retreats from its current levels, it may find support at the 4230 points level. If this support level is breached, it could extend the correction and lead to a test of a stronger support level at 4170 points. If the index breaks this level, it may face additional downward pressure, potentially resulting in a decline towards the 4100 points level.

S&P 500 6-6-2023