Week Ahead: Will US500 stay above 6000 milestone?

• US500 ↑ 5.1% MTD, pushing 2024 gains to almost 26%

• Posted only 2 negative months in 2024 – April & October

• Notched 52 record highs this year

• Over past year NFP triggered moves of ↓ ↑ 0.8%

• Technical levels – 6050, 6000, 5970

FXTM’s US500, which tracks the benchmark S&P 500 index could be on track for its best trading month in 2024.

But this will depend on whether bulls give one final push on the last trading day of November.

The Index has gained roughly 3.7% since Trump’s election win on November 5th.

Despite hawkish comments from Fed Powell sparking a selloff from 6000 mid-month, the “Trump trade” has kept bulls in the game with the US500 up roughly 5.1% month-to-date.

But as we enter December, the question is whether bulls can maintain their hunger for gains?

The US500 has dazzled investors, notching 52 record highs in 2024.

However, after breaching the psychological 6000 level, prices have traded within a range on the daily charts.

Still, prices up almost 26% year-to-date, adding to the 24.2% gains secured in 2023.

 

The incoming US jobs report among other key data points and speeches by Fed officials including Powell could impact the US500 in the week ahead:

Saturday, 30th November

• CN50: China non-manufacturing PMI, manufacturing PMI

Monday, 2nd December

• AU200: Australia retail sales, building approvals
• CN50: China Caixin manufacturing PMI
• EUR: Eurozone Manufacturing PMI, unemployment, Germany Manufacturing PMI
• UK100: UK S&P Global/CIPS UK Manufacturing PMI
• US500: US construction spending, ISM Manufacturing, Fed speeches

Tuesday, 3rd December

• AUD: Australia current account
• GBP: BOE Governor Andrew Bailey, UK Chancellor Rachel Reeves speech
• USDInd: Fed Governor Adriana Kugler, Chicago Fed President Austan Goolsbee speech

Wednesday, 4th December

• AUD: Australia GDP
• CN50: China Caixin services PMI
• EU50: S&P Global Eurozone Services PMI, ECB President Christine Lagarde speech
• US500: Fed Chair Jerome Powell speech, Fed issues Beige Book
• OECD publishes economic outlook.

Thursday, 5th December

• AU200: Australia trade
• EUR: Eurozone retail sales, Germany factory orders
• OIL: OPEC+ ministerial meeting
• TWN: Taiwan CPI
• US500: US trade, initial jobless claims

Friday, 6th December

• CAD: Canada unemployment
• EUR: Eurozone GDP, Germany industrial production
• JP225: Japan household spending
• US500: US November jobs report, University of Michigan consumer sentiment, Fed speeches

 

Can the US500 move higher?

The foundations are in place for US equity bulls to keep their foot on the pedal.

Market optimism around corporate tax cuts and a softer regulatory environment under Trump could keep this party rolling. And markets still expect the Fed to cut interest rates by January 2025.

However, the prospect of slower Fed rate cuts in the face of rising inflation could cap gains down the road. Geopolitical tensions that result in a risk-off mode could also trigger a selloff.

 

What factors could rock the US500 in the week ahead?

    1) US November jobs report

Markets expect the US economy to have created 200,000 jobs in November, compared to the 12,000 in the previous month.

Note: The low NFP number for October was the product of hurricanes and Boeing strikes.

The unemployment rate is forecast to rise 4.2% while average earnings are projected to tick lower to 0.3% MoM.

Ultimately, signs of weakness in the US labour market may hit the US500. However, any declines could be cushioned by bets around the Fed cutting interest rates in an effort to stimulate growth.

Over the past year, the US jobs report has sparked upside moves of as much as 0.8% or declines of 0.8% in a 6-hour window post-release.

Note: Other key US data points such as the ISM Manufacturing and initial jobless claims may also impact the US500.

 

    2) Fed Chair Powell and Co.

Fed Chair Powell will deliver his speech on Wednesday 4th December with a handful of other policymakers speaking days before and after him. Given how these speeches may influence expectations around what action’s the Fed takes in December, it could move the US500.

• Should dovish comments from Powell and co. boost bets around a December rate cut, the US500 may push higher.

• If Powell and other Fed officials sound less dovish than expected, this could drag the US500 lower.

 

    3) Technical forces

The US500 is firmly bullish on the daily timeframe due to the consistently higher highs and higher lows.

Although prices are trading well above the 50, 100 and 200-day SMA, the Relative Strength Index (RSI) is approaching overbought territory.

• A solid weekly close above the 6000 level may open a path to 6037, 6050 and 6100.    

• Should prices slip below 6000, this may trigger a selloff toward 5970, 5930 and 5900.

 

US500 Powell NFP US jobs report