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S&P500 Forecast: SPX extends losses on slowdown worries, jobs data up next

Article By: ,  Senior Market Analyst
September 4, 2024 2:47 PM

US futures

Dow future 0.41% at 41328

S&P futures -0.02% at 5613

Nasdaq futures -0.37% at 19447

In Europe

FTSE -0.24% at 8275

Dax -0.27% at 18616

  • Recession worries build after manufacturing data
  • US JOLTS job openings are due shortly
  • Nvidia drops further after subpoena from the DoJ
  • Oil falls on China & US demand concerns

Stocks fall further ahead of JOLTS job openings

U.S. stocks are pointing to a weaker open, extending yesterday's steep losses as recession fears resurface and as investors look ahead to the jolts job reports.

Yesterday, the main US stock indices closed in the red, with the S&P 500 falling to a two-week low and the Nasdaq dropping 3%.

Economic data released yesterday showed that the US ISM index rose to 47.2 in August, falling short of expectations of 47.5, whilst the S&P global manufacturing PMI was revised downwards to 47.9 in August, marking its first decline in seven months.

The data has unnerved the market, which was already jittery about a recession in the US. It's worth noting that the data wasn't encouraging, but there wasn't anything particularly disastrous or unknown about the figures either, highlighting just how nervous investors are.

Attention is now on Jolts job openings, which are expected to show that job openings remained roughly unchanged in July compared to June at 8.1 million. However, the ratio between those looking for work and job openings also reached its lowest level in three years. Any disappointment

Corporate news

Nvidia is falling, extending steep losses from yesterday, on news that the US Department of Justice has sent the company a subpoena as part of a deepening investigation into its AI chip market dominance.

Dollar Tree stock is set to open 10% lower after the discount retailer reported Q2 earnings that were well short of expectations and reduced its full-year outlook, citing increased pressure on its customers.

Asana is set to open 14% lower after the software company reported challenging quarterly results and announced a change of its CFO.

S&P 500 forecast – technical analysis.

The S&P 500 fell sharply from 5650 yesterday, breaking out of a near-term range and dropping below the rising trendline support dating back to October 2023. The price is testing support at the 50 SMA. A break below here could spur a deeper selloff to 5400, the July low ahead of 5350 the May high. On the upside, buyers will need to retake 5550 te August 1 high to extend gains towards 5650.

FX markets – USD steady, EUR/USD falls

The USD is holding steady after booking losses in the previous session as recession fears weighed on demand for the USD. Investors will continue digesting data across the week to assess the likelihood of a hard or soft landing.

EUR/USD is holding steady at 1.1050 after the final eurozone PMI showed a downward revision to 52.9 from 53.3 in the preliminary reading. This was still up from July but was mainly owed to an increase in French business activity thanks to the Paris Olympics, which is arguably a one-off.

GBP/USD is showing resilience against the US dollar after the UK services PMI was upwardly revised for August. The service sector, the UK's dominant sector, expanded to 53.7, up from 53.5 in the preliminary reading. This was the highest reading since April and marked the 10th straight month that the PMI has remained above 50. The data showed that businesses are still feeling the benefit of falling borrowing costs and post-election political stability

Oil falls further on demand concerns

Oil prices Have fallen below $70.00 a barrel amid concerns over a slowdown in the US and China, the world's largest oil consumers.

Weaker-than-expected manufacturing figures from the US yesterday, combined with softer-than-expected Chinese data here overnight, fueled concerns over the demand outlook in the world’s largest economies.

Losses are being limited by news that OPEC+ is mulling delays to its planned supply increase. OPEC+ has planned output hikes in October, but given the recent market volatility, a delay is now being discussed.

 

 

 

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