S&P 500 seeks support amid rate cut expectations

The S&P 500 (SPX) opened at $6,467.7 on Monday. Recent market dynamics have been primarily driven by the release of the US Personal Consumer Expenditures (PCE) index, which came in line with expectations. This convinced investors of the Federal Reserve’s (Fed) intention to cut rates at its September meeting. However, the SPX’s reaction was relatively muted, as traders had largely priced in the continuation of the easing cycle after Jerome Powell's recent comments. Additionally, active profit-taking and reduced interest in the stock index at the end of last month triggered a correction.

The market is now focused on the upcoming employment report for August, scheduled to be published this Friday. Job openings in the US are expected to increase by 75,000. Any deviations from this forecast could cause heightened volatility. Stronger-than-expected data may cast doubt on imminent monetary easing, while weaker figures could bolster trader confidence in further rate cuts.

Investors are also keeping an eye on the Magnificent Seven stocks, which together account for a third of the S&P 500's total capitalization. The market is beginning to consider analysts' warnings that profit growth rates among major tech companies may slow in the coming quarters. After a months-long rally, this has prompted a wave of profit-taking.

From a technical perspective, the current decline looks like a healthy correction within a broader uptrend rather than the beginning of a large-scale reversal. On the daily chart, the price is moving downward in an ascending channel to its lower boundary, indicating a potential test of support. The S&P 500 is now trading at $6,455. The Stochastic Oscillator is located in the 75–80 range, suggesting that the index is exiting overbought conditions and moving toward neutral territory. The %K line dropping below the %D one confirms the onset of a short-term corrective phase.

Consider the following trading plan:

Buy SPX during a rebound from the support, with Take Profit set at $6,540, which is above the historical high, and Stop Loss placed at $6,400.

The forecast remains valid from September 1 to September 8, 2025.