S&P 500 Subdued Despite Microsoft’s Bullish Explosion, US First-Quarter GDP Eyed

S&P 500 OUTLOOK:

• S&P 500 inches decrease amid cautious market sentiment regardless of Microsoft’s sturdy rally following upbeat earnings
• MSFT shares soar greater than 7% after quarterly outcomes beat expectations and steerage surprises to the upside
• Attention now turns to US first-quarter GDP on Thursday

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The S&P 500 retreated on Wednesday, falling 0.38% to 4,056 in a extremely risky session, with most sectors ending the day in damaging territory, however tech commanding power, supported by Microsoft’s 7.24% rally following its upbeat quarterly outcomes and constructive revenue steerage.

While the present earnings season has been encouraging relative to the overly pessimistic outlook, sentiment stays extraordinarily fragile within the face of rising headwinds, together with weaker development and shrinking margins. Granted, enterprise exercise has held up remarkably nicely, however traders worry that the nation is headed for a recession later this 12 months, an occasion that would drag company earnings considerably.

We’ll get extra clues concerning the well being of the financial system on Thursday, when the U.S. Bureau of Economic Analysis releases its preliminary report on first-quarter gross home product. In phrases of expectations, GDP is seen growing 2% on an annualized foundation, however downward revisions to retail gross sales knowledge issued this week might set the stage for a a lot softer end result.

UPCOMING ECONOMIC DATA

Source: DailyFX Economic Calendar

Looking forward to the incoming report, merchants ought to maintain a detailed eye on the development in private consumption expenditures, the nation’s primary development driver. If family spending cracks, it is probably not lengthy earlier than the financial system slips into recession. Obviously, this state of affairs can be bearish for U.S. shares within the close to time period, however could pave the way in which for a rally later as soon as the Fed begins to chop charges to spice up the restoration.

Focusing on technical analysis, the S&P 500 has taken a flip to the draw back after breaking beneath trendline assist at 4,125 earlier this week, with costs heading in direction of the 50-day easy shifting common (4,035) on the time of writing – the following key flooring to bear in mind. If this stage is taken out, we might see a drop in direction of the 200-day easy shifting common briefly order.

On the flip aspect, if patrons regain decisive management of the market and spark a bullish reversal unexpectedly, which isn’t the baseline case, preliminary resistance lies at 4,080, adopted by 4,140. On additional power, the main target shifts greater to the 4,180-4,200 area.

S&P 500 TECNICHAL CHART

Source: TradingView