The US ISM Non-Manufacturing PMI data for July smashed expectations and bettered the previous number, and this was enough to send the S&P 500 index soaring on the day. The US ISM Non-Manufacturing PMI number came in at 58.1, which beat the market expectation of 55.0 and also exceeded the June 2020 figure of 57.1, to overcome the weak ADP Employment Change data and send the S&P 500 index 0.57% higher on the day.
As already indicated in the ADP employment change data, the services sector was responsible for most of the private sector employment in July, adding a whopping 166000 jobs out of the 167000 jobs that were added by the private sector in the United States in total. It is no surprise that the ISM Non-manufacturing PMI number, which captures the business conditions in the services sector in the United States, exceeded expectations in July.
Technical Outlook for the S&P 500 Index
The US Highest number factoring PMI number we have improved in July, but this does not necessarily mean that the jobs have come back. This factor could prove decisive in the price action of the S&P 500 index as it approaches the 3335.5 distance level. The lack of fundamental improvement in overall employment could cause the S&P 500 index to be capped at that level. If this is the case, a price rejection and pullback may occur at that resistance level, which then allows the index too deep to what the 313 7.0 support level. Furthermore, this move could cause a test of the lower border of the rising wedge pattern on the diligent, and if this border breaks down, then a step towards the 3228.4 price level or the 3070.8 and the 3028.3 price levels cannot be ruled out.
On the flip side, if the S&P 500 index can break above the 3335.5 resistance, this could open the door to Wards the 3400 psychological resistance level. This price move would also invalidate the rising wedge pattern. For the price action on the S&P 500 index would depend on how the rest of the week’s fundamentals play out especially the non-farm payrolls report on Friday which would give a clear picture on public-sector employment in the US. Ahead of this report, we also have the Initial Jobless Claims due for release tomorrow which will show how many we also have the initial jobless claims due for release tomorrow which will show how many unemployed persons in the US are filing claims for unemployment benefits for the first time