S&P 500 Daily Update for Monday August 4, 2025

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Market Update Summary for Friday, August 1, 2025:
Outlook for Monday, August 4, 2025
Friday's Market Performance:
Negative Day: The S&P 500 experienced a significant decline, dropping below the 20-period moving average, signaling a short-term negative trend.
Employment Report Impact: A disappointing employment report, weaker than expected with downward revisions to prior months, contributed to the downturn. The unemployment rate rose to 4.2%.
Market Levels: The Dow fell below 44,000, the S&P 500 dropped below 6,300 (from 6,400), and the NASDAQ saw a sharp decline. The S&P 500 gapped lower at the open, hitting below S2 at 6,265, found support around 6,215, but faced resistance at R2 and closed down 1.6% with above-average volume.
Defensive Shift: Value stocks outperformed growth, indicating a defensive market posture. Sectors including healthcare, staples, and utilities showed relative strength, while discretionary, tech, and communication sectors were hit hard.
Economic and Policy Factors:
Tariffs: New tariffs (e.g., 50% on Brazil, 35% on Canada, 25% on India, 20% on Taiwan, 40% on trans-shipped goods) took effect, adding pressure. These were expected but aligned with a seasonal weak period.
Economic Indicators: Weaker-than-expected ISM manufacturing (48, below 50, signaling contraction) and construction spending (-0.4%) added to economic concerns. Interest rates dropped to 4.22% from 4.36%, reflecting a flight to safety.
Fed and Policy Changes: Fed Governor Adriana Kugler’s resignation from the FOMC was noted, with President Trump to nominate a successor. Trump also fired the Commissioner of Labor Statistics over data revisions, causing typical controversy.
Technical Indicators:
Short-Term Weakness: The S&P 500 is below the 20-period moving average, with indicators such as the Parabolic SAR, StochRSI, and Williams %R turning negative. The VIX spiked above 20 (20.38), indicating heightened volatility and negative annualized returns.
Intermediate and Long-Term Trends: Intermediate-term indicators (e.g., McClellan Oscillator, Connors RSI) show negative divergence. Long-term indicators are still positive but showing early weakness.
Sentiment and Volatility: Sentiment dropped to neutral (50) from 63, reflecting growing nervousness. The VIX’s RSI (9-period) hit extreme levels, and the volatility risk premium was high but dropped post-decline.
Sector and Asset Performance:
Sectors: Defensive sectors (healthcare, staples, utilities) outperformed, while growth sectors (tech, discretionary, communication) lagged. Financials are underperforming the S&P, nearing a "death cross" with the ratio.
Other Assets: The dollar fell below 100, oil dropped over 3%, and bonds rose in the short and intermediate term. Commodities turned negative in the short term.
Outlook for Monday, August 4, 2025:
Economic Calendar: Factory orders are the primary report due. No major economic reports are scheduled for Friday, but ISM services, mortgage applications, productivity, and jobless claims will follow later in the week.
Seasonality: August historically shows weakness in post-election years, with a return of -1.2% since 1950. A potential bounce may occur early in the month, but further declines are possible.
Market Outlook: Short-term trend is negative, with weakness developing in the intermediate term. The long-term trend remains positive but is under pressure. Key levels to watch include the S&P’s 50-day moving average as support.
Conclusion:
The S&P 500 is navigating a challenging period with economic weakness, new tariffs, and seasonal headwinds contributing to a short-term bearish outlook. While intermediate and long-term trends remain positive, developing weaknesses suggest caution. Investors should monitor upcoming economic data and tariff developments over the weekend (if any) for further direction.

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DISCLAIMER This video is for entertainment purposes only. I am not a financial adviser, and you should do your own research and go through your own thought process before investing in a position. Trading is risky!