Wall Street Rally Pause on Fed’s Hawkish Monetary Policy

Key Takeaways:

*Wall Street sentiment buoyed by U.S.-China trade talk.

*Fed’s hawkish approach hinders the S&P from reaching higher. 

S&P 500 Rally Stalls Near Recent Highs as Market Awaits Trade Talk Clarity

The S&P 500 has advanced nearly 5% after breaking out of an asymmetric triangle formation, signaling strong upward momentum in recent sessions. However, that bullish drive has since moderated as investors turned their attention to the Federal Reserve’s policy stance. As expected, the Fed maintained a hawkish tone during its latest rate decision, tempering risk appetite and capping further gains in the benchmark index. A higher borrowing cost deters investors to venture into the equity market including S&P which dampened the sentiment in Wall Street. 

The S&P 500 now trades near its recent highs, with market participants closely watching the outcome of U.S.-China trade talks underway in Switzerland. A constructive outcome could reinvigorate sentiment and set the stage for the index to chart fresh record territory. 

Technical Outlook

S&P 500, H4

The S&P 500 has posted a strong technical breakout after surging above an asymmetric triangle formation, reaching a key resistance level near the 5,690 mark. Despite a lack of fresh catalysts, the index remains buoyant at its recent highs, indicating sustained bullish sentiment among investors.

Momentum indicators reinforce the upbeat tone. The Relative Strength Index remains near overbought territory, while the MACD continues to advance after crossing above the zero line—both pointing to strengthening upward momentum. Traders now await fresh drivers that could determine whether the index can extend its rally to uncharted territory.

Resistance level: 5860.00, 6120.00

Support level: 5377.00, 5070.00