S&P 500

S&P500: what to expect after the Fed and ECB meetings?

The meeting of the central banks of the main developed economies has attracted the attention of investors, influencing the performance of stock markets globally.
Despite the uncertainties and differences of opinion between European and American central bankers, the S&P500 has shown impressive resilience, surprising analysts and maintaining a bullish trajectory.
So what makes sense to expect from the main US stock market index? Fed and ECB: a divergence that does not seem to be of interest to the market The communication from the president of the European Central Bank, Christine Lagarde, has generated uncertainty in the European markets.
On the contrary, the words of the chairman of the US Federal Reserve, Jerome Powell, stimulated a positive reaction in the United States.
This divergence in reactions is a direct result of the contrasting approaches taken by the two central bankers.
In the United States, Powell anticipated possible rate cuts in 2024, confirming market expectations.
This triggered a bullish impulse towards less capitalized stocks, which had previously underperformed the reference index.
However, the December 15 session marked a moment of indecision, probably influenced by conflicting indications coming from the European Central Bank.
Despite the economic challenges in Europe, the ECB has chosen to maintain a less accommodative stance, showing a determined desire not to give ground.
This position has triggered speculation and questions about the real intentions of central banks, leading to speculation of a possible bluff.
S&P500, a particular technical situation From a technical point of view, the S&P500 presents surprising strength.
Although the technical oscillators on daily and weekly timeframes are in graphic hyperextension territories, the index continues to dominate the landscape.
Investor demand remains high, and the S&P500 appears to show no signs of slowing.
This is evident from the fact that, despite the historical highs being only three percentage points away from current levels, the index does not seem at all inclined to correct its trend.
This strength is even more impressive considering the recovery in 2023, when the S&P500 recorded a positive performance of 25%.
The current upward momentum is fueled mainly by the contribution of smaller capitalization companies.
These firms, initially skeptical of the positive outlook for large-cap companies due to high financing costs, are now benefiting from the new monetary policy outlook.
The market is currently discounting the reduction in these costs, reflecting positively on the budget expectations of these companies.
This dynamic, in turn, supports current prices and contributes to the overall performance of the S&P500.
What to expect now from the S&P500 index? As investors navigate geopolitical uncertainties and mixed signals from central banks, the S&P500 maintains its dominant position.
The future of the index will depend on how economic events develop and the decisions of central banks in the coming months.
It is clear that investors are seeking clarity on the divergences between European and American monetary policies.
The ECB, despite the economic difficulties, has chosen a less accommodative path, raising questions about its strategy.
Investors are divided between interpreting this move as a position of strength or as a bluff.
From a technical point of view, the S&P500 shows strength that defies chart extension indicators.
Its resilience and continued uptrend could be a sign of investor confidence in the long-term economic prospects of the United States.

Author: A.W.M.

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