"The S&P 500 has retreated after approaching the historical high established in October this year. As the index once again tested this price level, market sentiment turned more cautious, as investors require additional confirmation that earnings growth can be sustained, inflation will not re-accelerate, and the Federal Reserve truly has room to ease policy without reigniting inflationary pressures. With these conditions still unclear, profit-taking has begun to emerge, resulting in the current technical pullback that warrants attention."
"The growth outlook remains uneven, with certain segments showing a clear slowdown while core consumption continues to hold up. The Empire State Manufacturing Index fell to -3.9, weaker than both forecasts and the previous reading, signalling negative momentum in the manufacturing sector. At the same time, Flash Services PMI at 52.9, below the expected 54.0, indicates that the services sector is also losing momentum."
"However, slower growth is not inherently negative unless it translates into a broad-based deterioration in corporate earnings. Meanwhile, Core Retail Sales rose by 0.4%, exceeding expectations, while headline Retail Sales remained flat at 0.0%, suggesting that consumers may be becoming more cautious. For the S&P 500 at this stage, the key issue is not whether the Fed will cut interest rates, but rather the accompanying guidance and the pace at which easing is implemented."
The S&P 500 pulled back after testing the October high as investors sought confirmation that earnings growth can be sustained, inflation will not re-accelerate, and the Federal Reserve has room to ease policy. Profit-taking produced a technical retreat while growth remains uneven: manufacturing and services indicators weakened. The Empire State Manufacturing Index fell to -3.9 and Flash Services PMI came in at 52.9, both signaling losing momentum. Core Retail Sales rose 0.4% while headline Retail Sales were flat, suggesting cautious consumers. Labour data showed wage growth at 0.1% and unemployment at 4.6%, supporting Fed caution.
Read at London Business News | Londonlovesbusiness.com
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