Weekly Stock Market Update & SPY Technical Analysis
Markets kicked off the new month with optimism as stocks rallied to end last week following multiple key economic and earnings reports. The Fed left rates unchanged as expected, and large cap tech stocks came in line with earnings estimates. Following The Fed’s meeting, Powell’s speech sparked hope of a July interest rate cut, but he stated it will highly depend on economic developments. We got some of those economic developments on Friday after the U.S. Unemployment Report reflected an uptick to 3.9% in unemployment, the highest in months. Although higher unemployment puts a strain on the economy, it can help slowdown demand, which ultimately cools inflation and helps The Fed’s agenda. The combination of that report with Apple’s post-earnings jump resulted in a strong end of week close, which can lead to more highs this week.
Now that markets have gone through the tests of last week, traders may feel more confident and we’ll likely see smoother conditions. There are several Federal Reserve members speaking everyday this week, but it is unlikely they’ll bring any surprises since the FOMC just passed. The narrative of maintaining current rates until further economic development will likely stay the same.
Apart from Fed speakers, May’s preliminary consumer sentiment report will be released on Friday, which is expected to reflect about the same number as last month’s data. Consumers continue to express concern about overall economic conditions, but consumer sentiment has notably bounced back from last year’s May reading of 59.2 to last month’s at 77.2.
SPY technical analysis:
Every dip markets have given this year has been bought up, and although the pull back we saw in April was a bit sharper, it seems like buyers are once again buying the dip. Friday’s close brought SPY into a more favorable bullish range and its not far from potentially moving to retest all time highs. The main resistance range in focus this week will be 515.40-518.00, a move above that level has the all time high price target. There may be a pullback to start the week and retest 505.75, buyers will need to defend that point to reinforce their position.