S&P 500 Index dips as investors prepare for Jackson Hole

• The S&P 500 fell back below 4,400 points after two straight days of gains.
• Ahead of Powell’s speech on Friday, hawkish words from Thomas Barkin boosted expectations for Fed tightening.
• On Wednesday, eyes will be on S&P Global PMI data.

In the Tuesday session, market sentiment remains mixed as investors wait for new catalysts to define its short-term trajectory.

On the downside, US Treasury yields rallied during the US mid-session following hawkish comments from Thomas Barkin that if inflationary pressures show no sign of abating, further tightening would be necessary. Meanwhile, the 2-year yield rose above 5% again to its highest level since early July, causing the US stock market to lose interest.

For the rest of the week, investors will be closely watching the US S&P Global Services and Manufacturing PMI figures for August, which are due to be released on Wednesday. It should be noted that a strong economy tends to favor the stock market. Still, due to the Federal Reserve’s (Fed) stance, evidence of a hot economy may cause investors to price in a more hawkish Fed, and in that case, put pressure on the S&P.

According to CME’s FedWatch tool, markets are still expecting a pause in September, followed by a 25 basis point (bp) rise at the November meeting. However, those odds could change after Jerome Powell’s speech at the Jackson Hole Symposium on Friday, where investors will look for clues on future direction.

SP levels to watch

Based on the daily chart, the technical outlook for the SPX remains bearish in the short term. The Relative Strength Index (RSI) remains in negative territory, while the Moving Average Divergence (MACD) prints higher red bars. Furthermore, the index is below its 20-day SMA but above its 100- and 200-day SMAs, suggesting that bulls still have an advantage over bears in broad strokes.

Supports: 4,370, 4,350, 4,300 (100-day SMA).
Resistances: 4,400, 4,420, 4,450.

SP Daily Chart