S&P 500: Wall Street could rebound in the short term

The outlook is becoming constructive again on the New York Stock Exchange, but the employment figures will be decisive in the short term.

The return/risk couple becomes attractive again on the S&P 500

The New York Stock Exchange could rebound this week after losing ground and consolidating since the Fed’s rate cut on December 18. The S&P 500 returns to test important short-term support at around 5,830 points while depth indicators reflect an oversold market in the short term. Among these indicators, the percentage of Russell 3000 stocks moving above its 50-session moving average is less than 30%.

The selling pressure of the last three weeks has clearly moderated investor sentiment. The NAAIM survey of active fund managers fell to 64%, its lowest level since April.

Source: NAAIM

The return/risk couple therefore becomes again in favor of purchases of the S&P 500 in the short term, but the numerous employment figures published during this first full week of 2025 will probably be key. Investors await the JOLTS and ADP reports Tuesday and Wednesday, then the unemployment rate and job creations on Friday. Markets will react negatively if published figures are too much higher or too low than expected, as this would fuel fears of a second wave of inflation or recession.

S&P 500 daily price chart – key levels

The week marks the start of a marathon for investors

If it falls below the support at around 5830 points, the S&P 500 would form a “head and shoulders” pattern, which would pave the way for a correction twice as large. Concretely, a retracement to the 200-session moving average, currently close to 5600 points, would then be expected before a possible rebound.

The next few weeks will be extremely busy and could therefore create volatility in the markets. After the US employment figures this week, the corporate results publication season will begin and US CPI inflation will be published. Then will come the inauguration of Donald Trump on January 20, then the publication of the results of the technological behemoths.