US500: Balancing Rate-Cut Optimism, AI Hype, and Growth Risks

US500: Balancing Rate-Cut Optimism, AI Hype, and Growth Risks

Technical Analysts
1. US500 bounced off EMA100 for the first time in six months, flagging a weak upside momentum and raising the potential of a corrective phase, with price likely to consolidate within the 6,510–6,920 range.

2. That said, the EMA stack remains positively aligned, keeping the broader bias to the upside.

3. A decisive break above the prior high near 6,920 would confirm uptrend continuation, opening the door to further gains.

4. Conversely, the 6,920–6,980 area is a key resistance zone; failure to clear this area would increase the odds of a pullback toward support around 6,510.

Fundamental analysis
The US500 is being driven by a mix of supportive and negative factors.
5. On the supportive side, expectations of a Fed rate cut in December help boost risky assets, while lower bond yields encourage investors to seek higher-yielding assets.

6. On the negative side, US economic data have shown signs of weakness, including labor market indicators and economic activities, alongside stretched valuations in tech stocks and concerns over AI-related spending.

7. All of these factors are likely to keep the US500 trading within a range and volatile, amid shifting fundamentals and an index that has already risen significantly since the start of the year. Any further rallies could be followed by profit-taking.

8. Key points to watch are major data releases such as labor market figures, inflation, and evolving expectations for a Fed rate cut in December.

Analysis by: Krisada Yoonaisil, Financial Markets Strategist at Exness