The S&P 500 index has opened for the day’s session slightly lower, as investors digest the latest NFP figures. A better-than-expected employment change and a lower unemployment rate seem not to have swayed the market sentiment positively. This is because the NFP numbers show that hiring is a third of what it was in the month before the release, and this is attributable to the resurgence of the coronavirus pandemic that has caused businesses to shut down and also limit the staff numbers.
The employment change, unemployment rate and average hourly earnings data all came in better than the markets had expected, but the markets may be more cautious about the numbers and more concerned about the stimulus talks. The unemployment rate dropped from 11.1% in June to 10.2% in July. The market had expected a drop to 10.5%. The data also show that 1,763,000 jobs were added to the US economy in July. This number was much lower than the 4,791,000 persons hired in June, showing that hiring has slowed as the resurgence of the coronavirus pandemic brings about new lockdown restrictions and shuttering of businesses especially those in the retail sector. Average hourly earnings also surprise massively to the upside as a market and respected the reading of -0.5%. Instead, the 0.2% recorded exceeded the -1.3% number for June. Majority of hirings came from government, leisure and hospitality, retail trade, professional services, other services, and health care.
The S&P 500 has opened 0.15% lower and is currently trading at 3344.3, a few points higher than the 3335.5 former resistance that now serves as support. Despite a lower open, the S&P 500 only needs to close above this support level to confirm the upside break of that level on a time filter confirmation. This opens the door for a possible push towards the R3 pivot, which intersects the upper boundary of the rising wedge pattern. A further extension to 3401.1 invalidates the pattern.
On the flip side, if today’s price action ends with a breakdown below the wedge and the 3335.5 price level, we could see a move towards the 3228.4 price support, where the S1 pivot is located. Before that, an initial intraday target may present itself at 3248.8. Further targets lie below at 3137.0 and 3070.8.
