US 500 analysis: correction continues, but it is too early for a trend reversal

The US 500 stock index declined by 2.85%, but the overall trend remains upward. Find out more in our US 500 price forecast and analysis for next week, 25-29 November 2024.

US 500 forecast: key trading points

• Recent data: US industrial production decreased by 0.3% in October
• Economic indicators: this measure tracks the output of goods and services in the industrial sectors of the economy, including manufacturing, mining, and utilities
• Market impact: stagnation in the industrial sector may increase the likelihood of a US Federal Reserve key rate cut, which would positively impact the stock market
• Resistance: 6,035.0, Support: 5,700.0
• US 500 price forecast: 6,115.0

Fundamental analysis

The US 500 index is above 6,000 points, 23% higher than the average Wall Street analyst forecast. This surge came as a surprise to market participants. Nevertheless, the industrial production data indicates a weakening economy, which may exert short-term pressure on the stock market.

Source: https://tradingeconomics.com/united-states/industrial-production

If the manufacturing industry continues to slow, this may increase expectations for a more decisive interest rate cut by the regulator, supporting rate-sensitive sectors such as real estate and technology. A downturn in industrial production may indicate the need for a more flexible monetary policy if the slowdown spreads to other economic sectors.

Federal Reserve Chair Jerome Powell stated that the central bank does not consider the outcome of elections when deciding on monetary policy issues. “In the near term, the election will not influence our political decisions”, Powell said at a press conference following the Federal Reserve meeting, where the Fed decided to lower the interest rate by 0.25%, as expected. The US 500 index forecast is moderately positive.

US 500 technical analysis

The US 500 stock index remains in an uptrend following a 2.85% correction. According to the US 500 technical analysis, the US 500 is set to reach a new all-time high and secure above the current 6,035.0 resistance level, with the nearest growth target at 6,115.0. Only a breakout below the 5,700.0 support level may signal a trend reversal.

The following scenarios are considered for the US 500 price forecast:

• Pessimistic US 500 forecast: a breakout below the 5,700.0 support level could push the index down to 5,615.0
• Optimistic US 500 forecast: a breakout above the 6,035.0 resistance level could drive the index up to 6,115.0

Summary

US industrial production declined by 0.3% in October, aligning with analysts’ expectations. If the slowdown in the manufacturing industry continues, this could raise expectations for a more aggressive US Federal Reserve key rate cut. This sharp increase came as a surprise to market participants. However, growth potential remains.