S&P 500 (SPY) Futures Show No Reaction To OPEC+ Oil Production Cut

Key Insights

• S&P 500 futures are swinging between gains and losses while markets are closed in observation of the Labor Day. 
• WTI oil is gaining ground as OPEC+ decided to cut production targets by 100,000 bpd in October. 
• A move below 3915 will push S&P 500 towards the 3875 level. 

S&P 500 Futures Stay Close To The Support At 3915

S&P 500 futures are mostly flat in electronic trading while the U.S. markets are closed for the Labor Day holiday.

On Friday, S&P 500 suffered another sell-off as tech stocks remained weak. The FedWatch Tool indicates that there is a 60% probability of a 75 bps rate hike at the next Fed meeting, so traders prepare for the hawkish Fed.

From a technical point of view, S&P 500 found support near the 3915 level. This level has been tested several times and proved its strength. To gain additional downside momentum, S&P 500 must settle below 3915. In this scenario, it will head towards the next support level at 3875.

On the upside, the nearest resistance level for S&P 500 is located at 3950. In case S&P 500 manages to settle above this level, it will head towards the resistance level at 3980. A move above 3980 will open the way to the test of the resistance at 4000.

Energy Stocks May Be In Focus Tomorrow

WTI oil is up by more than 2% today as OPEC+ members agreed to cut production targets by 100,000 bpd in October. This is a symbolic cut as OPEC+ is currently producing below its quotas as some members have production problems.

However, the decision sends an important signal to the market. OPEC+ is worried about the slowdown of the world economy and is ready to act if necessary.

Major oil stocks like Exxon Mobil, Chevron, and Schlumberger have enjoyed support in recent weeks. These stocks may continue to move higher if OPEC’s attempts to put a floor under oil prices are successful.

It should be noted that a sustainable rebound of S&P 500 will be impossible without a broad rebound of tech stocks. Apple, Microsoft, Amazon and other big names have been under significant pressure in recent trading sessions.

The dynamics of tech stocks will remain dependent on the market’s evaluation of Fed’s next steps. If markets believe that the Fed will be hawkish, and Treasury yields continue to move higher, tech stocks will likely move lower. In this scenario, S&P 500 will likely settle below the 3900 level and develop additional downside momentum.

For a look at all of today’s economic events, check out our economic calendar.