The S&P 500 is stuck near a key technical level as earnings season and the midterm elections loom, with analysts warning a break below 7,500 could signal a more severe downturn.
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01Summary
- 01The S&P 500 has been chopping around its 50-day moving average for 11 weeks, with pullbacks limited to 3% over the past half-year.
- 02A break below 7,500 on the S&P 500 would, according to JPMorgan's Jason Hunter, cause the market to lose the benefit of the doubt.
- 03Morgan Stanley's Mike Wilson expects the Fed to acknowledge the tightening of financial conditions at its next meeting, while Bank of America's Aditya Bhave maintains a non-consensus prediction for an October rate hike.
- 04Ned Davis Research notes that if Big Tech disappoints on Q3 earnings, a full market washout could occur, similar to October 2023.
- 05The fourth quarter after a midterm-election year is historically overwhelmingly positive, but 2018 saw a 19% peak-to-trough decline in that period.
02Why it matters
Investors must watch whether the S&P 500 holds above 7,500; a break below that level could mean a more significant correction, while a rally could be set up if earnings and the election outcome support a turnaround.
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