S&P 500 Index Hits New Record High, But Bullish Momentum is Thin

The S&P 500 index touched off a new record high today at 4093.9, but further upside momentum is lacking after the downbeat US initial jobless claims report took the sting out of the bulls at market open. According to data from the Department of Labor, the initial jobless claims for the week ended April 3 came in at 744K, which was more than the 682K predicted by analysts. The figure also exceeded the previous figure of 728K, representing a setback in the efforts by the US government to bring back the jobs.

The figure was not entirely surprising as last week’s Non-Farm Payrolls report showed that most of the job additions for March 2021 came in the manufacturing sector. The retail sector of the US economy continues to flounder, and the FOMC minutes captures the feeling among the monetary policymakers that there was still a lot to be done to bring back jobs in the US.

The S&P 500 index is hanging on to the FOMC minutes, which promises to maintain the current efforts to stimulate the US economy using the available stimulus tools. The index is also finding support from Thursday’s drop in the 10-year Treasury yield by as much as 2.21%, indicating that capital on the day is exiting the bond market; a positive for US indices.

Technical Outlook for S&P 500 Index

The bulls require additional momentum to continue to push the index deeper into record territory, where the initial target set earlier in the week by Credit Suisse is located at the 4200 psychological price level. Above this area, the 200% Fibonacci extension level from the swing low of 23 March to the swing high of 29 April 2020 at 4301 remains a viable potential upside barrier.

On the flip side, failure to garner sufficient upside momentum to drive prices could allow the index to retest the 4000 psychological support, with 3950.1 and 3910.5 lining up as additional downside targets. 3870.0 remains a solid pivot, with 3823.9 and 3765.1 also serving as support levels further south. 

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S&P 500 Index; Daily Chart

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