- Protests in China raised worries about additional supply chain disruptions.
- Hawkish comments from Fed’s Williams and Bullard put more pressure on S&P 500 and NASDAQ Composite.
- A move below 3960 will push S&P 500 towards the support at 3920.
Fed Speakers And Protests In China Hurt Market Sentiment
S&P 500 settled below the 4000 level as traders reacted to protests in China and hawkish comments from Fed officials.
China was shaken by protests after 10 people died in a fire in the Xinjiang province. Protesters believed that victims of the fire did not get timely help due to anti-coronavirus measures.
Markets fear that China’s zero-COVID policy and protests will put more pressure on the country’s economy and lead to additional supply chain issues. These fears pushed WTI oil towards yearly lows, although oil markets managed to rebound amid rumors about a potential production cut from OPEC+ on December 4.
Fed speakers put additional pressure on market sentiment. Fed’s Williams said that inflation remained too high and that unemployment rate may grow up to 5% at the end of 2023. He noted that Fed should continue to raise rates.
Williams has also said that the Fed may start to bring down interest rates in 2024, which was too hawkish for the market that hopes that Fed would start cutting rates in the second half of 2023.
Meanwhile, Fed’s Bullard said that markets were underestimating chances of higher interest rates. He noted that the rates should be raised to at least 5%.
S&P 500 Heads Towards The Support Level At 3960
S&P 500 is currently moving towards the support level at 3960. A move below this level will open the way to the test of the support at 3920. In case S&P 500 declines below 3920, it will head towards the next support at the 50 EMA at 3885.
On the upside, the previous support at 4000 will serve as the first resistance level for S&P 500. If S&P 500 manages to settle back above this level, it will head towards the next resistance level at 4015. A move above the resistance at 4015 will push S&P 500 towards the resistance at 4040.
For a look at all of today’s economic events, check out our economic calendar.