The S&P 500 reached a new record high on Monday as the market anticipates a crucial week ahead, characterized by significant trade discussions, the Federal Reserve’s interest rate decision, and a flurry of earnings disclosures from major tech firms. The index gained momentum last week, riding a wave of optimism following softer-than-expected inflation data for September, which bolstered hopes that the Fed may cut rates in its upcoming meeting.
In early trading on Monday, the S&P 500 climbed nearly 1% to open at 6,850, reflecting a 40% increase since its low earlier in the year and a 15% rise since January. This surge is largely attributed to buoyant corporate profits, growing excitement around artificial intelligence stocks, and expectations of an accommodating rate environment. Market sentiment has also been lifted by constructive developments in U.S.-China trade negotiations, especially with a meeting scheduled later this week between President Trump and President Xi Jinping.
Analyzing the S&P 500’s technical indicators, it has been operating within an ascending broadening formation since late May, recently finding support at both the lower trendline and the 50-day moving average. The relative strength index suggests there is still room for upward movement before reaching critical resistance levels.
If the S&P 500 continues on its current trajectory, it may test the upper trendline of the broadening formation, projected to be around 7,075, roughly 4% higher than Friday’s close. However, traders should keep an eye on potential exit points in this zone, as it also serves as a dynamic resistance.
On the downside, critical support levels exist, with the first significant point at approximately 6,600, where the lower trendline of the formation intersects with the 50-day moving average. If a decline occurs, further support could be found around the 6,500 level, near the upper boundaries of recent sideways movement. A deeper retracement may see the index testing the 6,360 mark, which aligns with a trendline that has historically provided support.
Overall, as the S&P 500 makes remarkable gains amidst a backdrop of evolving trade relations and economic policy shifts, investors remain optimistic about potential future growth. The upcoming earnings reports from leading tech companies such as Meta Platforms, Microsoft, Alphabet, Amazon, and Apple are likely to play a pivotal role in shaping market performance in the days ahead.