- Stocks decline on Monday but investors eye a change as the US session opens.
- The VIX and US Bond Yields rise but is it enough to keep stocks low?
- Goldman Sachs Group says the SNP500 will hit $6,000 this year.
- Oil prices increase to a 6-week high due to continued Middle East tensions.
SNP500 – Goldman Sachs Increases Its Target Price For the USA500!
The price of the SNP500 trades 0.50% lower within Monday’s first trading sessions. However, investors continue to monitor technical analysis as the US session gets ready to open. A change in session is known to potentially change the price movement characteristics.
The negative factors of the SNP500 are a less dovish Federal Reserve and the escalating Middle East tensions. However, these were still a factor on Friday where the price rose 0.88%. The main change from Friday to today’s sessions is the price in Oil. Oil prices rose 2.35% to a 6-week high due to continued Middle East tensions. The lower oil prices can increase prices and the cost of energy which is negative for consumer demand, the economy and as a result stocks. In addition to this, higher prices could also prompt the Federal Reserve to be less dovish which is again negative for stocks.
The above is contributing to lower stock prices on Monday. This can also be witnessed when monitoring global stocks including Asian and European Indices. The price of the VIX currently trades 2.49% higher and the US 10-Year Bond Yields trade 0.022% higher. Both developments are known to pressure stocks and indicate a further downward price movement. Cryptocurrencies also trade lower indicating a lower risk appetite.
If the price falls below $5,723.00, technical analysis will also signal a downward trend for the short-term. If the price does decline, the closest support level can be seen at $5,708.00.
Despite lower market risk appetite and sentiment toward stocks, investors should remain cautious and be prepared for potential changes as the US session opens. This change can be triggered by investors taking advantage of the lower purchase price to increase exposure before Friday’s earnings reports. Earnings Season starts on Friday with JP Morgan, Wells Fargo and Blackrock. If these companies beat their earnings expectations, the SNP500 may continue to rise as it has over the past 4-weeks.
JP Morgan stocks have risen 2.37% over the past 5-days and Wells Fargo by 2.55%. This indicates investors are expecting positive earnings data, but this cannot yet be guaranteed. Goldman Sachs also continues to increase their target for the SNP500. Goldman Sachs has increased its year-end and 12-month target for the S&P 500, citing expected corporate margin growth and a stable economic outlook through 2025. The firm raised the 12-month target to 6,300 and the year-end target to 6,000 from 5,600.
In order to obtain strong buy signals, investors will be looking for Oil prices to fall, for Thursday’s inflation rate to fall below 2.3% and for Friday’s earnings to be promising. These 3 factors may prompt higher demand throughout the week.
Technical analysis on the 15-minute chart continues to indicate an upward price movement regardless of the decline. The price remains above the 200-bar SMA and the lower Moving Averages have crossed upwards.
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Michalis Efthymiou
Market Analyst
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