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- US equities hovering near record territory as traders await crucial jobs data.
- Rate cut hopes buoy sentiment, but risks linger from trade tensions.
- Trump’s 9 July tariff deadline looms large on next week’s agenda.
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The S&P 500 continues to flirt with fresh all-time highs, as investors ride the tailwinds of a robust rally that kicked off in early April. There have been a few catalysts behind this rally. First, it was Trump hitting pause on reciprocal tariffs; then, a wave of optimism washed over markets following a sudden de-escalation in the Middle East.
The bulls took charge, and markets haven’t looked back since. But with 4 July celebrations on the doorstep and Wall Street due to close early, today’s shortened session has a singular focus: the all-important US non-farm payrolls report.
Before discussing the jobs report and looking ahead to next week’s deadline for tariffs, let’s have a quick look at the S&P 500 futures to mark some levels to watch today.
S&P 500 Technical Analysis and Trade Ideas
Let’s not beat around the bush: the trend is clearly bullish on the S&P 500. This means that for a vast majority of trading strategies, only the long side is being considered while shorting the market doesn’t make technical sense, even if the rally looks quite a bit overstretched at these levels given, for example, an RSI reading of 73 or so (above the “overbought” threshold of 70.0).
Does this mean that you should chase every breakout? Absolutely not. But dip-buying remains the dominant strategy – until markets start to print lower lows and lower highs again.
In terms of levels to watch, initial short-term support is seen around 6265, marking Monday’s high. But the big support levels are quite a bit beneath the market now, thanks to the recent melt-up. Among them, the area between the previous all-time highs of 6152 (hit in December) and 6166 (February’s peak) is the first key line of defence for the bulls, now that we are well above this zone.
Below that, you have the trend line converging with the 21-day exponential moving average at around 6112. Then, last Monday’s high, marking the post-ceasefire breakout level, comes in at 6071.
On the upside, there are no prior reference points to watch. So, round handles like 6,300, 6,400 etc., could be the next potential targets for the bulls.
All Eyes on the Labour Market
It’s no secret that recent chatter around potential rate cuts from the Federal Reserve has played a starring role in fuelling the equity rally. But Fed Chair Jerome Powell remains resolute — at least for now. He insists that inflation remains sticky and the labour market resilient enough to justify keeping policy restrictive at 4.25% to 4.50%.
That resolve, however, could be tested today. Should the jobs report undershoot expectations, Powell’s position might start to look shaky — and markets would likely jump at the chance to price in a July rate cut more aggressively. At present, that’s seen as a 25% probability, but one very weak print could tip the scales. A strong report, on the other hand, should see those probabilities fall into single digits.
NFP: What Are the Markets Expecting?
Consensus currently sits at a modest 110,000 increase in payrolls. But recent indicators have prompted a dose of caution. Just yesterday, the ADP private payrolls report turned negative for the first time since March 2023 — hardly a confidence booster.
If the headline NFP figure dips below the 100K mark, that could raise eyebrows. Meanwhile, the unemployment rate is expected to edge up slightly to 4.3% from 4.2%.
Market Implications: How Will NFP Impact Stocks?
So how will markets respond? In short — it depends. A ‘goldilocks’ print (not too strong, not too weak) would likely keep the equity rally intact. Anything dramatically weaker might fuel rate cut expectations, yes, but it could also revive recession fears — a less welcome guest at the party.
Conversely, a blowout jobs number could undermine the prospect of a summer cut entirely, dampening enthusiasm on Wall Street just as traders prepare to down tools for Independence Day.
It’s a tightrope walk, and the timing couldn’t be more delicate.
Trump’s Tariff Sword Still Hangs
And let’s not forget the geopolitical backdrop. Next (LON:NXT) Wednesday, 9 July, marks the deadline for ongoing trade negotiations. Thus far, progress has been underwhelming — and if no major progress is made or worse talks break down, President Trump could well return to his favourite pressure tactic: tariff threats. That’s a scenario that could cast a long shadow over the current rally.
So, while the S&P 500 may continue to bask in record territory today, the next few trading sessions hold plenty of risk — from surprise jobs data to geopolitical tremors. Keep your eyes on the charts, but don’t lose sight of the calendar.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.