U.S. stocks ended the first half of the year strongly, but whether the rally can continue is the key. Since their lows in late October, U.S. stocks have rebounded strongly by more than 33%, with the S&P 500 hitting several closing highs. However, since hitting new highs, investors have begun to sell and take profits, and the S&P has fallen about 0.5%.
This reflects the "fragility" behind the strong upward momentum of US stocks. On Friday, the market reacted mutedly to the release of the PCE price index for May in the United States, which ended the day slightly higher by 0.09%, which could mean that interest rate cut expectations have been almost fully priced in by the market over the past few months. Moreover, S&P's current forward P/E ratio remains at an all-time high of 21x. Therefore, for US stocks to extend their rally, they need more conclusive interest rate cut expectations and higher earnings guidance.
Focus on July: CPI, FOMC MeetingIn the next month, the June CPI and Fed interest rate meetings will be the key factors affecting the trend of US stocks. On July 11, the US will release CPI data for June. According to economists surveyed by FactSet, CPI growth is expected to be 3.1% year-on-year in June, down 2 percentage points from 3.3% in the previous month. If the data is in line with expectations, it will provide further support for the Fed to cut interest rates, which is expected to advance the timing of the rate cut, which is good for U.S. stocks. From July 30 to 31, the Federal Reserve held a FOMC meeting and announced the decision on the most positive rate. The Fed is widely expected to remain "on the move" and keep the federal funds rate unchanged at a range of 5.25%-5.5%, and any post-meeting Powell's remarks on the path of interest rates will be the focus of the market.
ICAP Technical Analysis首席技术策略师Walter Zimmerman表示：
"The endless wait for the Fed to cut interest rates will definitely last all summer."
Focus on the 5200-5300 support level Equity data at the start of the year suggests that when the S&P pulls back to the 5200-5300 range, buying will increase and act as support. Zimmerman believes that if the S&P falls back into this range in July, investors' buying behavior will be an important basis for judging market confidence, that is, if there is no significant increase in buying, it may mean that the market is no longer optimistic about the outlook for the stock market. It is also believed that the S&P's 50-day moving average (5,269 as of Friday's close) is also crucial, and in general, the S&P usually finds support at this average, but tends to fall further when it falls below it.
According to FactSet, the S&P has fallen below average several times over the past three years and continued to fall before bottoming, with three of those double-digit retracements. ⭐ Star Wall Street news, good content do not miss ⭐ This article does not constitute personal investment advice, does not represent the views of the platform, the market is risky, investment needs to be cautious, please make independent judgment and decision-making.