Stock Market Outlook for Thu May 2 2024 – Potential Bounce But Lower

Prior Trading Day Summary:

On Wednesday investors moved stocks higher during the Fed’s news conference but then sold those same stocks lower in the final half hour in a wild day of volatility. Trading volumes were above average and the Dow Jones managed to squeeze out a gain but the S&P and NASDAQ ended the day lower.

The S&P lost 17 points on volume of 4.6 billion shares traded.

The NASDAQ ended down 52 points on 5.4 billion shares traded.

Let’s review the closing technical indicators from Wed May 1 2024 to see what investors should expect on Thu May 2 2024.

Stock Market Outlook: SPX Closing Chart For Wed May 1 2024

The index closed below the 21 and 50 day moving averages.

The closing candlestick is signaling bearish for Thursday but with a strong possibility of a bounce.

The 21 day moving average is below the 50 day moving average for a down signal.

The 50 day moving average is moving lower which is bearish.

The 200 day moving average is still climbing. The 200 day is at 4755 which is bullish and the 100 day is also climbing.

The Lower Bollinger Band is below the 100 day moving average and the Upper Bollinger Band is falling sharply. Both are bearish signals.

The S&P chart is overwhelming bearish for Thursday but is still holding above the 100 day moving average.

SPX Stock Market Outlook review of Wed May 1 2024. Chart courtesy TradingView

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Thu May 2 2024 

For Thursday the technical indicators are pointing to a strong possibility of a bounce attempt and then a move lower. The SPX continues to hold above the 100 day moving average which is good but the market has its first major down signal as the 21 day moving average is continuing to fall below the 50 day. This is a major down signal.

Overall investors should expect a bounce attempt, perhaps as early as the open but they should stay cautious and take profits in any bounce until the technical indicators overwhelmingly support a move higher. At present that is not the case.

On Wednesday the FOMC interest rate decision left interest rates unchanged and the Fed Chair indicated that inflation remains a problem and is not consistently falling. He did not rule out the chance of interest rate cut(s) before the end of the year. Analysts believe there could be one interest rate cui by year-end. I still think there will be a cut ahead of the November Presidential election.

Potential Economic and Political Market Moving Events

The main events this week are the Fed’s decision on interest rates on Wednesday followed by the April employment report on Friday.

Monday:

No reports of significance. This usually favors the bulls.

Tuesday:

9:00 S&P Case-Shiller home price index was expected to rise slightly to 6.7% from 6.6% but rose to 7.3% which helped send stocks lower.

10:00 Consumer confidence was expected to dip slightly to 103.5 from 104.7 but fell to 97 which also sent stocks lower.

Wednesday:

8:15 ADP employment is expected at 183,000 but was higher at 192,000.

10:00 Construction spending is expected to rise 0.3% but fell to -0.2%

10:00 ISM Manufacturing is expected to report 49.9% but came in at 49.2%

10:00 Job openings are estimated at 8.7 million but fell to 8.5 million.

2:00 FOMC interest rate decision left rates unchanged

2:30 Fed Chair Powell news conference sent stocks higher initially and then lower

Intraday – auto sales

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims are estimated at 212,000

8:30 Trade deficit is expected at -69.5 billion

8:30 Productivity for the first quarter is expected at 0.5%

8:30 Unit-labor costs are expected at 4.0%

10:00 Factory orders for March are expected at 1.7%