S&P 500, Nasdaq 100 Drop on Global Growth Woes and Still-Tight US Labor Market?

S&P 500, Nasdaq 100, JOLTS Jobs, July Fed hike – Asia Pacific Briefing:

• Standard & Poor’s 500And Nasdaq 100 sinks for a second day as morale plummets
• worldwide growth Problems The still-tight US labor market indicators have been in focus
• A rising wedge is forming in the S&P 500 as bullish momentum fades

Standard & Poor’s 500

The S&P 500, Nasdaq 100 and Dow Jones fell on Wednesday in a second day of eroding risk appetite. Earlier this week, the implications of the fiscal tightening of a possible US debt ceiling deal contributed to deteriorating market sentiment. Over the past 24 hours, two significant economic events likely added momentum to the decline in stock markets.

During the Asia-Pacific trading session on Wednesday, the latest Chinese Manufacturing PMI read crossed wires. It was disappointing across the board, indicating a slowing outlook for global growth. Meanwhile, US job vacancies data for April came in surprisingly higher. This translates to approx 1.8 job opportunities For every unemployed person in the country.

Financial markets continued to reinforce their expectations of a 25 basis point rate hike from the Federal Reserve in July. Meanwhile, stopping in June may be the most likely scenario. Over the past 24 hours, Fed Governor Philip Jefferson said that “skipping a rate hike would allow time to assess the data.” Of course, economic conditions remain volatile. On Friday, we will get the next Non-Farm Payrolls report.

With that in mind, the Asia-Pacific trading session on Thursday could follow in the footsteps of Wall Street. This would put regional indices, such as Japan’s Nikkei 225 and Australia’s ASX 200, at risk. This will open the door to sentiment as a major driver for the markets given a rather quiet economic schedule.

S&P 500 technical analysis

On the daily chart, the S&P 500 appears to be trading within the boundaries of a rising wedge chart formation. Meanwhile, the negative RSI divergence shows that the bullish momentum is fading. This can sometimes precede a lower turn. Breaking the bottom of the wedge will open the door to turn downward, focusing on the support. This appears to be the 38.2% Fibonacci extension level at 4109.

S&P 500 daily chart

Chart created in TradingView

– By Daniel Dubrovsky, Chief Strategist for DailyFX.com