S&P 500 (SPY) Retreats As Tech Stocks Remain Under Pressure

Key Insights

• S&P 500 failed to settle above the resistance at 4015 and gained significant downside momentum in the last hour. 
• Energy and basic materials stocks moved higher, but weak tech stocks put pressure on the market. 
• A move below 3950 will push S&P 500 towards the support at 3915.

S&P 500 Tests Support at 3050

S&P 500 faced resistance near 4015 and pulled back towards 3950 as traders continued to evaluate the jobs market data from the U.S.

The Non Farm Payrolls report showed that the U.S. economy added 315,000 jobs in August, compared to analyst consensus of 300,000.

Unemployment Rate increased from 3.5% in July to 3.7% in August as Participation Rate grew from 62.1% to 62.4%. The headline Unemployment Rate number provided some support to stocks at the start of today’s trading session as some traders were willing to bet that the Fed could be more dovish when Unemployment Rate is moving higher.

However, it looks unlikely that Fed would pay attention to the minor increase in the Unemployment Rate, which was triggered by the increase in the number of people willing to work. Meanwhile, the Non Farm Payrolls report indicated that the economy was still adding jobs.

The market mood stays bearish. The recent attempt to settle above 4015 was not successful, and S&P 500 gained significant downside momentum. In case S&P 500 moves below the support at 3950, it will head towards the next support level, which is located near the recent lows at 3915.

Energy Stocks Enjoy Strong Support But Weak Tech Stocks Push S&P 500 Lower

Energy stocks were the main driver behind today’s attempt to rebound. Oil services stocks like Halliburton, Schlumberger, and Baker Hughes were among the biggest gainers in S&P 500.

Major gold producers, including Newmont and Barrick Gold, have also enjoyed strong support as gold prices rebounded towards the $1715 level.

Leading tech stocks remained weak. Meta, NVIDIA, and Tesla are down by about 2% today. Tech stocks have been under material pressure in recent trading sessions, but traders are not ready to bet on their rebound.

At this point, S&P 500 gets some support from the strong performance of energy and basic materials stocks. For a sustainable rebound, the market needs support from other segments. If such support does not materialize, we may see new lows in S&P 500 next week.

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