S&P 500 entered into a short correction during the previous week. The market reacted to the news that Fitch rating agency downgraded the US long-term government debt to AA+. As economists are noting, this would have an impact on higher borrowing costs for US companies, as borrowers now need to calculate with higher risk of doing business with US clients. Certainly it will have some implications to the US economy, but some analysts say that it will actually help Fed Chair Powell to finally slow down the US economy in Fed`s fight with inflation. For the US equities this was the worst weekly trading session since March. S&P 500 was down by 2.3% ending the week at level of 4.478. Whether this is a start of a rally, remains unclear as investors are currently divided on this topic. Earnings report pushed Amazon shares 8.3% higher, while Booking Holdings gained 7.9% on better than expected quarterly results. Still, investors continue to be concerned about a potential reversal of inflation, considering that average hourly earnings rose 0.4% for the month, and higher from market expectations.
During the week S&P 500 exited from the overbought side and started a short reversal. RSI reached level of 48, indicating a potential for a further move toward the downside. Lowest weekly level was 4.473, but the peak from June at 4.400 has not been tested. This might be the next target of the index for the week ahead, with some probability that 4.000 might also be reached. A move toward the higher grounds seems unlikely based on current charts and technical analysis.
During the week S&P 500 exited from the overbought side and started a short reversal. RSI reached level of 48, indicating a potential for a further move toward the downside. Lowest weekly level was 4.473, but the peak from June at 4.400 has not been tested. This might be the next target of the index for the week ahead, with some probability that 4.000 might also be reached. A move toward the higher grounds seems unlikely based on current charts and technical analysis.
