The S&P 500 fell last week with another failure at the 6,000 level hinting at a possible correction.
SP 500 – Weekly Chart
The S&P 500 has fallen to close at 5,827 and opens up the potential for a further correction toward the 5,000 level.
The US December jobs report revealed a drop in the unemployment rate to 4.1%, joined by a rise and acceleration in monthly payroll gains of 256,000. That ended market hopes for a January rate cut from the Federal Reserve. Before the jobs report, the odds were already low for an interest rate cut at the next meeting.
With a solid labor market and rising year-on-year consumer inflation rates, the next Fed rate cut may not happen until May 2025. With only a week left until Donald Trump’s Presidential inauguration, market participants may also be looking at taking some profits off the table. The incoming President has threatened to rattle the economic status quo with tariffs and other measures.
Wildfires have continued to spread in California and an early estimate by AccuWeather put the damage and economic losses at between $135 billion and $150 billion. That would be the most costly natural disaster in the nation’s history.
“To put this into perspective, the total damage and economic loss from this wildfire disaster could reach nearly 4% of the annual GDP of the state of California,” AccuWeather analysts said.
“Around 1 day chart lows ($92K – 88K), bid liquidity has been buffered up a decent amount with increased demand,” he wrote. A move into those levels would break the long-term support line and put BTC in a pressure situation ahead of Trump’s inauguration.
The US stock market has continued to climb higher but has paused at the 6,000 level. The last correction was in July 2024 and cost the market 10%.
The week ahead will start the upcoming Q4 earnings season with the big banks in focus from Wednesday. JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup (C) the week’s earnings, alongside the important chipmaker, Taiwan Semiconductor.
The key economic data will come on Wednesday with the December CPI report. That release of consumer inflation data could test the market’s expectations for interest rate levels if the figure is elevated. Weakness in the stock market is aligning with Bitcoin testing key support, which may warn that some selling is on the way this week.
