S&P drops to key level as recession fears mount

Sentiment turned sour yesterday afternoon and investors have remained in panic mode ever since.

There has been bloodbath on Wall Street. Sentiment turned sour yesterday afternoon and investors have remained in panic mode ever since. The publication of a very poor US manufacturing PMI report was a game changer. Up until now, the US manufacturing and other sectors of the economy had remained resilient despite weakness in other economic regions like the Eurozone and China. BUT now investors are worried that the world’s largest economy has also caught the cold.

So, right now, stocks and the US dollar are falling sharply, causing bond yields to weaken as investors seek the relative safety of government bonds. Dollar-denominated and safe-haven gold has found itself in unexpected demand after falling noticeably in the previous days.

At the time of writing, the major US indices were near their lows and there were no signs of a rebound. However, the S&P 500 was testing its bullish trend line near 2885. Will we see some bargain hunting around these levels? Will the bears ease off the gas? Time will tell. For now, it is worth monitoring the benchmark index closely. Given the over-extended moves, a short-term pullback should not come as major surprise. But if the trend breaks on a closing basis then expect more selling in the latter parts of the week. 

Source: Trading View and FOREX.com. Please note this product may not be available to trade in all regions.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account