2 S&P 500 Levels We're Watching Closely as Market Reverses Course

As it turns out, the market’s move higher Thursday morning was short-lived, with folks pointing to further erosion in December rate-cut hopes following the stronger-than-expected September Employment report figures. While it’s hard to argue with the 119,000 jobs figure for the month, as it means more people working, it feeds the recent narrative that the Fed isn’t likely to deliver a December rate cut. Let’s also consider that November options expire Friday, and the impact that is likely having on the market today, as well as the continued pain with crypto.

However, when we look past just the number of jobs created in September, we find the Unemployment Rate for the month came in at 4.4%, which happens to be the highest level since October 2021’s 4.5%. That likely explains the quiet increase we see in the CME FedWatch Tools’ probability for a December cut to ~40% up from 30% yesterday.

As we discussed yesterday, the fact that the October and November Employment reports won’t be out until December 16 — after the Fed’s December 10 policy decision — presents a complication of sorts. Still, we will be getting ample data about inflation and job creation in November over the coming two weeks, beginning with Friday’s Flash PMI Report. We continue to think it will be that data that ultimately decides the fate of a December rate cut.

When the S&P 500 rebounded following a 5% pullback from its recent highs, we discussed that we could see a re-test of that level, and a successful test would help set the conditions for the market to move higher. We will therefore continue to watch the 6574 level for the S&P 500 closely, as well as the 100-day moving average at 5544. 

We will also continue to pick our spots like we did earlier today, and if we see other holdings in the Pro Portfolio slip into an oversold condition, we may be inclined to put additional capital to work.