The S&P 500 index continued its ascent on Thursday after a sharp sell-off in its previous session. On Friday, the ES Mini Futures were down 5 points till press time but the outlook on the US equities remained bullish. At the time of writing, the futures tracking the benchmark index stood at 4,791, which was still above yesterday’s closing of SPX.
The US equities seem to be entering a Goldilocks as the analysts expect the tightening cycle of the US Federal Reserve to end soon. As per the latest report from Bank of America, the bank expects the Fed to start cutting the rates from March 2024. This could be the first of the potential four rate cuts to occur next year.
These dovish expectations toward the central bank policies are a result of the cooling down inflation which is lowering steadily. Additionally, a stronger-than-expected GDP growth in 2024 will likely keep the recession at bay to achieve the Fed target of a soft landing.
These macroeconomic factors point toward stable growth in the equity markets and the S&P 500 index. However, as we know, the markets love to surprise people, so it’s better to wait for the index to find strength above its 2021 all-time high before just chasing the ongoing rally.
Another thing to be wary about is the bearish divergence on the weekly RSI. These types of divergences occur close to the market tops. However, the daily RSI still seems to have some room for growth, which suggests the bulls still have some gas left in their tanks.
S&P 500 Index Outlook & Analysis
