S&P 500 above 4,100 ahead of US retail sales and debt ceiling talks

• S&P 500 extends its consolidation within an increasingly narrow range, above 4,100 points.
• Focus is on US retail sales data and debt ceiling negotiations.
• The Speaker of the Republican House of Representatives affirmed yesterday that the two parties were still very far apart.

He S&P 500 index extends its consolidating move into a narrowing range, above 4,100 points, during the European session on Tuesday. The markets remain cautious ahead of US debt ceiling negotiations and release of April retail sales data in the US At the time of writing, the S&P 500 is trading around 4,130 points, virtually unchanged on the day.

The day before, the data showed that the New York Fed Empire State Manufacturing Index declined to -31.8 points from 10.8 the previous month. This figure came in well below market expectations of -2.5 points and allowed the S&P 500 to rally from its daily low near 4,110 points to close the day around 4,135, amid lower expectations. hardline around the Federal Reserve (Fed). A series of softer data in the US could rule out further rate hikes by the Fed and bring stability to financial markets.

Having said that, Neel Kashkaripresident of the Federal Reserve Bank of Minneapolis, reiterated Monday that inflation is “too high” and that there is a long way to go before the inflation target is reached, as reported by Reuters. Kashkari further noted that the labor market is not as foamy as it was nine months ago, but said it remains strong overall: “We shouldn’t be fooled by a few months of good data,” Kashkari added.

These mixed comments/data lead to cautious optimism in markets, with the S&P 500 index staying within a tight range over the past week waiting for new catalysts.

These catalysts could come from the US retail sales data for April, which will be released today at the start of the American session. Retail sales are expected to rise 0.7% in the month, after the decrease of -0.6% of the previous month. Sales excluding vehicles are forecast to rise 04%, from -0.4% previously. Weaker data could cause some fear in the markets and weigh somewhat on the S&P 500.

In addition to general US retail sales data, Several companies in this sector present results during the weekbetween them and Home Depot (HD) Tuesday, target (TGT) on Wednesday and Alibaba (drool) and Walmart (WMT) on Thursday. Also, smaller retailers like Ross Stores (REST), foot locker (FL) and TJX Companies (TJX) will also present their results this week.

Big surprises in the retail sales data, accompanied by surprises in the main companies in the sector in the country, could boost market sentiment.

Last but not least, the focus will really be on the meeting of the President of the United States, Joe Bidenwith the Speaker of the Republican House of Representatives, Kevin McCarthy, and three other congressional leaders at 19:00 GMT for the next round of debt limit negotiations to avoid a catastrophic default. While Biden was optimistic over the weekend as negotiations continued to move forward, McCarthy, stated yesterday that the two parties were still very far apart.

Technically, the S&P 500 remains within a narrowing week-long range before the market opens on Tuesday. Looking down, initial support will be at the Monday low at 4,110followed by last week’s lows just below the level of the 4,100 points. A break of that level could point to the area of ​​recent lows near the 4,060 points.

Looking up, the index could find initial resistance at Friday’s highs at 4,150before aiming for weekly highs of 4,157. An improvement in sentiment leading to a break of that level could lift the index towards the area of ​​recent highs around the 4.170-4.175.

S&P 500 daily chart

S&P 500 technical levels