The S&P 500 index has failed to stop its downward performance and experienced a bearish trend. However, the bearish performance of the S&P 500 index can be attributed to concerns about inflation, the Federal Reserve’s monetary policy, geopolitical tensions in the Middle East, and expectations for the Fed’s rate cuts.

Investors will continue to monitor these factors closely for their impact on the stock market.

Geopolitical Tensions in the Middle East Exacerbate Market Volatility

On the geopolitical front, the S&P 500 index has been impacted by geopolitical tensions in the Middle East as it has contributed to increased market volatility and contributed to losses in the S&P 500, It should be noted that the long-lasting conflict between Israel and Hamas, along with escalating tensions with Iran, have raised concerns about geopolitical stability.

Meanwhile, the prospect of military conflict and its impact on regional stability leads to risk-off sentiment in the market. Therefore, the uncertainty surrounding geopolitical developments in the Middle East has further dampened investor confidence, worsening the bearish sentiment in the S&P 500 index.

Impact of United States Consumer Price Inflation Data on Fed Policy and Market Sentiment

Apart from this, the upcoming release of United States consumer price inflation data is expected to have a strong impact on the S&P 500 index. Economists are predicting an increase in inflation, leading to a growing anticipation of a shift in Fed policy towards interest rate cuts.

If inflation figures are lower than expected, this could strengthen expectations for rate cuts as soon as June, as investors aim to reduce the potential economic impact of rising consumer prices.

On the flip side, if inflation numbers come in higher than expected, it could trigger a reevaluation of expectations for rate cuts, potentially resulting in heightened market volatility.

Investors will be closely watching the Federal Open Market Committee (FOMC) Minutes for clues about the Fed’s monetary policy stance.

S&P500 Price Forecast: Technical Outlook

The S&P 500 is trading at 5,202, experiencing a slight decline of 0.16%. The index is currently below the pivot point of 5,221.06, with immediate resistance seen at 5,263.93, followed by 5,289.87 and 5,321.45.

Support levels are established at 5,182.15, 5,146.62, and 5,108.84, which could provide a rebounding ground.

The Relative Strength Index (RSI) stands at 47, hinting at a neutral market sentiment, while the 50-day Exponential Moving Average (EMA) at 5,205 closely aligns with current prices, suggesting a tentative market stance.

The market outlook is bearish below the pivot of 5,221.06, yet surpassing this threshold could signal a shift towards a bullish trend.