S&P 500 Trades Lower As US Consumers Lose Confidence in Recovery

The S&P 500 is trading lower as the revised consumer sentiment survey results from the University of Michigan indicate a slight drop to 78.1 in June. This figure is lower than the previous number of 78.9 and the 79.1 that markets had predicted.
The results indicate that the average US consumer is slightly less optimistic about the outlook for the US economy. The figure is a Trump-era low and could give the administration something to think about with less than five months to the US elections.
A breakdown of the survey shows that consumer sentiment was static in Southern states. The economies of several of these states have been reopened, but are now facing a surge in coronavirus cases. Confidence was highest in the US North-East, where residents do not expect much of an increase in coronavirus cases. New York and New Jersey remain the states where the governors have been more cautious about reopening the economy.
The lacklustre UoM Consumer Sentiment Survey comes on the back of the Fed’s response to its annual stress tests of banks in the US. The Fed has suspended buybacks and capped investor payouts, and these actions have not pleased investors on the S&P 500 and other US markets.
The S&P 500 is presently down 62.01 points (or 2.02%) at 3020.5

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Outlook for S&P 500

Today’s downside on the S&P 500 index has brought it back to the support zone which has 3028.3 as the ceiling and 2961.4 as the floor. This means that the S&P 500’s price action since June continues to show lower highs, which strongly indicates that the recovery from the March 2020 lows may have stalled.

However, price has to break down the wall formed by the support zone to continue the slump. If this is actualized, 2844.3 is the next logical target, followed by 2793.4 (50% Fibonacci retracement from the 13 February high to the 23 March low) as well as 2707.7.

A bounce from the support zone could retest the 3070.8 resistance, with 3137.0 and 3228.4 being the next targets in line if the recovery picks up once more. However, only a break above 3228.4 re-establishes the higher highs that back up the higher lows of 2 April, 14 May and 15 June to indicate further uptrend recovery.

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