The S&P 500 is showing signs of contraction just below the key 6000 level. The ADP employment report, which revealed the slowest pace of hiring since March 2023, has raised some concern among investors. Whether this weak labor data will significantly impact the broader stock market remains to be seen.
Tariff effects appear to be gradually surfacing, first in jobless claims, then in the ISM manufacturing data, and now in the ADP report. Inflation data will likely be affected last, probably in a few months, due to the fact that both households and businesses frontloaded purchases ahead of the tariffs. As a result, the market could first confront recession fears, followed later by concerns about stagflation.
From a technical standpoint, a short-term RSI divergence is emerging, and the 6000 level is acting as strong resistance. If the S&P 500 fails to break above this resistance, a selloff could be triggered, with the 200-hour moving average as the initial target. Should the index fall below the 200-hour level, bearish momentum could increase, potentially deepening the correction.
To invalidate this negative scenario, the index would need a clear breakout above 6000, confirmed by multiple daily closes above that level.
Tariff effects appear to be gradually surfacing, first in jobless claims, then in the ISM manufacturing data, and now in the ADP report. Inflation data will likely be affected last, probably in a few months, due to the fact that both households and businesses frontloaded purchases ahead of the tariffs. As a result, the market could first confront recession fears, followed later by concerns about stagflation.
From a technical standpoint, a short-term RSI divergence is emerging, and the 6000 level is acting as strong resistance. If the S&P 500 fails to break above this resistance, a selloff could be triggered, with the 200-hour moving average as the initial target. Should the index fall below the 200-hour level, bearish momentum could increase, potentially deepening the correction.
To invalidate this negative scenario, the index would need a clear breakout above 6000, confirmed by multiple daily closes above that level.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.