S&P 500 price awaits key developments

Improved Sentiment

U.S. consumer confidence rose in July, driven by reduced concerns over economic growth and continued labor market resilience. A major contributor to this optimism was the extension of tax cuts passed by Congress earlier this month, building on the original 2017 tax reforms.

Investor sentiment also improved following a trade agreement between the U.S. and the European Union, which averted steep tariffs of 30%–50% on European imports. Under the deal, the EU agreed to a 15% tariff and committed to purchasing U.S. goods and energy, easing fears of a trade war escalation.

Meanwhile, the (U.S. – China) relations remain stable amid a temporary trade truce, which may be extended by another three months according to U.S. officials. No agreements have been reached yet with Canada, Mexico, Taiwan, or South Korea, though a deal with India appears imminent.

Focus on the Federal Reserve

Attention now turns to the Federal Reserve’s policy meeting, where interest rates are expected to remain unchanged at 4.50% for the fifth time this year. However, internal divisions within the FOMC have emerged, with some members calling for a rate cut. Markets currently price in a 60% chance of a rate cut in September.

The September meeting will feature updated economic projections and a revised Fed dot plot. Notably, the June dot plot pointed to a potential 50 basis point rate cut by year-end. The upcoming September’s dot plot projections will be shaped largely by labor market and inflation data from July and August.

A key question likely to be posed to Fed Chair Powell during the post-meeting press conference is whether political pressure from President Trump is influencing the Fed’s policy decisions.

Technical Outlook – At Record Highs

The S&P 500 reached a record high of 6,422 at the start of the week before pulling back on profit-taking. The index is currently trading within the zone of 6,146 to 6,500. A daily close above 6,500 would signal strong bullish momentum, potentially leading bulls to rally the price towards 6750. That said, the psychological resistance levels at 6,600 and 6,700, should be monitored along the way.

Key levels to watch in a Bearish Scenario

A daily close below 6,146 signals a weakening uptrend and may encourage bears to take the lead and trigger a correction move toward the 6,000 level. In this case, the support level of 6,069 should be considered.

S&P500 – Daily Price Chart

Chart Source: ADSS Platform