S&P 500 trims morning loses as we are heading to the close of a disastrous first quarter. The S&P 500 has the worst first quarter since 1938 amid the coronavirus outbreak. Portfolio rebalancing provides support for equities as passive funds increase the exposure to equities versus the bonds after the recent drop in valuations.
The Consumer confidence index drops to 120 in March from 132.6 the lowest level since 2017, amid the coronavirus spread and analysts forecast that the confidence would plunge more in the upcoming months. The Chicago Purchasing Managers’ Index came in at 47.8 above the expectations of 40 in March; the February reading was at 49.
The Chinese manufacturing PMI boosts sentiment as it managed a V-shaped rebound, from the record low of 35.7 to 52 in March. The quick recovery provides a promising sign that the U.S. might bounce back as quickly even I don’t believe that is the case for Europe.
Fed announced earlier the establishment of a temporary FIMA Repo Facility to help support the smooth functioning of financial markets, while there are rumours for an additional relief package up to 600 billion to small companies. Companies are now starting to revise their 2020 guidance, taking the impact of the coronavirus outbreak into account.
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S&P 500 Levels to Watch
S&P 500 after a weak start, managed to turn positive and as of writing is 0.23% higher at 2625, keeping the rebound from recent lows alive. The technical picture despite the recent bounce is still bearish, and a pullback can’t be ruled out.
First resistance will be met at 2,641 the daily high. The next level to watch is the 2,664 high from March 16th trading session. A convincingly break above might test the next resistance at 2,710 high from March 13th session.
On the other side, the daily low at 2,578 will provide the first support for the index. A break below might target 2,469 the low from yesterday’s trading session. If sellers pierce this level, then the way will be open for a move down to 2,409 the low from March 26.
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