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The S&P 500 is set for a pullback, stepping back from the key 6,000 resistance – how will the market respond to the downgrade? The S&P 500 gained 0.70% on Friday, extending its short-term uptrend and reaching a local high of 5,958.62. However, after the close, Moody’s lowered the credit rating for the US, causing a significant pullback in futures. The index is now expected to open 1.1% lower today, suggesting what currently looks like a correction of the recent uptrend. The 6,000 level remains a key resistance level that the market failed to breach during last week’s rally. Today’s opening will likely test the market’s resilience as traders react to the credit downgrade news. Moody’s downgraded the U.S. sovereign credit rating on Friday to ‘Aa1’ from ‘Aaa’, becoming the last of the major agencies to cut the prestigious triple-A rating that had been in place since 1919. The agency cited concerns over the country’s growing $36 trillion debt pile, which could be exacerbated by Trump’s plans to cut taxes. Investor sentiment has improved, as reflected in the last Wednesday’s AAII Investor Sentiment Survey, which reported that 35.9% of individual investors are bullish, while 44.4% are bearish. On Friday, the S&P 500 index extended its uptrend, closing at the highest level since late February. S&P 500: Strong gains last week now face a test Last week, the S&P 500 index jumped 5.27% as investors cheered the White House’s deal with China to temporarily slash levies. However, the Moody’s downgrade has changed the short-term sentiment, with futures indicating a significant pullback to start the week. Nasdaq 100: Expecting a pullback The tech-heavy Nasdaq approached the 21,500 level last week, with Friday’s trading session closing 0.43% higher. Today, it is expected to pull back by 1.5%. Currently, it looks like a correction…

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Filed under: News - @ May 19, 2025 5:22 pm