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04.08.2023 01:05 PM
American premarket on August 4. Stocks resume downward movement

Futures on US stock indices opened slightly higher on Friday. However, later, the pressure returned. Treasury notes continued their decline ahead of the release of US employment data. Speculators are sure to study it carefully for clues regarding Fed's future plans for monetary policy. Yet, some analysts assume that the regulator will be forced to continue the tightening cycle this fall. The Stoxx Europe 600 index also fell after an attempt to rise during the Asian session.

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Optimism in the stock market has waned after Apple Inc. reported a decrease in sales for the third quarter in a row yesterday. Sentiment improved as Amazon.com shares climbed by 9% after the news that the revenue of the world's largest e-commerce and cloud services company exceeded estimates.

Today, the NonFarm Payrolls report is in the spotlight. The economy is expected to add 200,000 new jobs in July. Although this will be the weakest result since the end of 2020, historically, this is a strong figure. If the report is positive, the Fed could stick to aggressive tightening. This is bearish for the US stock market and for risk assets.

As I have mentioned above, the yield on Treasury bonds rose. The benchmark 10-year government bonds added two basis points, growing to 4.19%. According to a report by Bank of America Corp., investors are now feeling from stocks as the risk of an economic downturn increases every day due to aggressive tightening. "Private clients are shifting back to 'risk-off' mode," analysts stressed, adding that a hard landing was still a risk for the second half of 2023 amid higher bond yields and tighter financial conditions.

WTI crude futures recovered to their weekly high of 81.86, while gold prices decreased after the growth of the US dollar and a fall in demand in the bond market.

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As for the technical outlook of the S&P 500, it was still trading with a bearish bias. Bulls may start the uptrend if the index settles above $4,515. At this level, there may be a breakout of $4,539. Bulls should also take control of $4,557. It will boost the bull market. In case of a downward movement due to low risk appetite, the index needs to hit $4,488. After that, an upward movement to $4,469 and $4,447 may occur.

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