The S&P 500 index opened for the last trading day of the week in deeply negative territory following comments by a member of the FOMC governing council. Fed President of the St. Louis Federal Reserve James Bullard acknowledged in a CNBC Friday interview covered by Reuters that Fed Chief Jerome Powell officially opened discussions on tapering during the FOMC meeting this week.
Tapering the QE program closes the tap of cheap funds that have supported companies and the capital markets during the worst pandemic’s economic fallout. It is seen as a negative for the US markets.
As of writing, the S&P 500 was trading 0.91% lower, pressured by a drop in all 11 sectors of the index.
Outlook for S&P 500 Index
The selloff in the S&P 500 index has allowed for a breakdown of the 4220.63 support. Price is now testing the 4176.61 support level. A breakdown of this price level provides for a further dip towards 4150.37. Additional price targets to the south are found at 4120.48 and 4082.72.
On the other hand, a bounce on the 4176.61 price support may allow for a recovery towards 4220.63, with the 4257.16 all-time high standing as the barrier to beat before the 4275 resistance level called by Credit Suisse comes to play. 4300 lies ahead as a potential psychological price resistance.