Volatile Day Leaves Market Under Critical Levels

As the bell rang to commence today’s trading session, the S&P 500 futures appeared to be treading water, showing only slight changes from the previous day’s close. Economic events on the calendar presented a similar outlook to yesterday’s, with little reaction to the Automatic Data Processing (ADP) national employment report.

The ADP report had projected an increase of 205,000 new jobs, but the actual figures released showed an even more robust labor market, with a higher number of 242,000 new positions added. This trend is an encouraging sign for the economy’s growth prospects, indicating a gradual expansion of the labor market, but as Federal Reserve (Fed) Chairman Powell had previously pointed out, a growing labor market does not “indicate any meaningful improvement in the balance between labor demand and labor supply from the perspective of the Fed.” 

After the opening bell rang, the market exhibited choppy and range-bound price action leading up to Jerome Powell’s testimony in front of the House at 10 a.m. Eastern. As market participants waited for Powell to speak, the Job Openings and Labor Turnover Survey (JOLTS) was released, beating the estimated forecast of 10.6 million with a reported 10.8 million. However, this report failed to produce any significant market movement as Powell began his speech.

During his testimony, Powell reiterated his main talking points on interest rates and the Fed’s slight deviation from the intended track, as he had done in his address to the Senate yesterday. He used a noteworthy phrase “higher for longer” when discussing the anticipated rate hikes. However, since this was not new or unexpected information, the market’s reaction was mild, causing a downward trend. Today’s trading action was less directional than yesterday’s and was marked by high volatility.

The S&P 500 futures faced resistance as they struggled to surpass the 4,000 mark, and continuous lower highs were established throughout the trading session. Another notable feature of today’s action was a new low for the week, followed by a massive cover pop to end the session. This last-minute upswing was significant enough to bring the market back into positive territory, ending an otherwise gloomy day.

Resistance in the Macro Being Respected

Taking a broader view of the S&P 500 futures, one can observe violent upward spikes, but the market continues to show respect for the resistance from above. The current trend indicates a lower path of resistance unless the market can demonstrate that it can surpass some of the moving averages positioned above.

Even if the market manages to break through a resistance zone above, it must hold that zone to confirm its validity. Otherwise, it seems likely that the market will move toward the Point of Control at 3,950.

Thursday’s Economic Events

The Economic calendar for the upcoming trading session includes two significant events. Firstly, there are the weekly Jobless Claims at 8:30 a.m. Eastern, followed by Federal Reserve (Fed) Vice Chairman Micheal Barr’s speech during the cash session at 10 a.m. Eastern. Depending on the overall sentiment, either of these events can cause the market to move in any direction.

During Barr’s speech, it will be crucial to observe if his comments align with what Fed Chairman Jerome Powell has been discussing over the past few sessions. If there is agreement between the two policymakers, it can further reinforce the Fed’s position and impact the market accordingly.

Late Cover Pop Leads to Green Close

The Nasdaq and the S&P 500 were positive to close the session. The S&P 500 futures closed up 0.15%, gaining 5.50 points, while the Nasdaq futures closed up 0.48%, adding 57 points. The Dow Jones futures did not follow, down 0.15%, losing 51 points.