Piece written by Alexa Smith, Trive Financial Market Analyst 

The S&P 500 Futures (CME: ES) witnessed a 1.33% decline on Wednesday after the FOMC Minutes revealed a divergence among central bank officials concerning the necessity of further interest rate hikes. Persistent macroeconomic data underscoring stubborn inflation alongside the robustness of the US economy has stoked concerns that elevated interest rates might endure, thus generating a risk-off setting.   

The banking sector bore the brunt of these losses, with Bank of America (ISIN: US0605051046) descending by 2.2%. Meanwhile, Nvidia (ISIN: US67066G1040) reversed course and ended 1% lower in anticipation of its earnings expected next week. However, macroeconomic data is a notable determinant of the Fed’s actions, with the release of Initial Jobless Claims holding the potential to bolster the Futures. Will the expected 8K drop soothe the S&P 500, or will Fed uncertainty continue to take centre stage?  

Technische Analyse 

A descending channel pattern is still in play on the 4H Chart, with the S&P 500 Futures tumbling down towards the channel support. A sharp rejection of the 4519 resistance level at the channel’s upper boundary saw the price action drop towards the 23.60% Fibonacci Retracement where the Futures flattened ahead of the FOMC Minutes. However, a hawkish Federal Reserve saw an additional pullback towards the 4409.50 support, where the futures established a one-month low.  

Since the price action is intersecting with the channel support, a correction towards the 4461.25 resistance could pave the way towards the channel resistance, supported by overbought levels. However, the Fed could pressure a further breakdown towards the 4374.25 major support, which could see a breakout of the channel.  

Zusammenfassung 

The S&P 500 Futures tumbled towards a one-month low after the FOMC Minutes revealed that interest rates will likely remain higher for longer. However, a surge from the channel support could bolster the index futures towards the 4461.25 resistance and reaffirm a descending channel pattern. Although, a hawkish Fed may encourage a sharper decline towards the 4374.25 support. 

Sources: TradingView, Reuters 

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