S&P 500 Daily Update for Wednesday September 3, 2025

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Market Summary for Tuesday, September 2, 2025:
Outlook for Wednesday, September 3, 2025:
Tuesday's Market Action:
The S&P 500 opened lower after the Labor Day weekend, with selling pressure evident at the start, The S&P 500 futures were down before the Open with weaker European markets.
Despite an early decline below key support levels (S1 at 6439, S2 at 6418, and S3 at 6371), late-session buying (buy-the-dip activity) mitigated losses, closing the S&P 500 down 0.69% but above the day's lows.
The S&P 500 closed below the 20-period moving averages (both simple and exponential), signaling a short-term negative trend, though longer-term trends remain positive.
Volume remained below average, suggesting limited participation, possibly due to the post-holiday session.
Mega-cap growth stocks underperformed, while small and mid-caps held up relatively better. Defensive sectors including energy and healthcare outperformed, while tech, discretionary, and real estate saw weakness.
Interest rates rose slightly, with the 10-year yield at 4.28%, but the bond market is showing no major inflation concerns. The dollar's strength likely added some pressure on stocks.
Key Technical Observations:
The markets are in a weak seasonal period (September historically the worst month for stocks), with some indicators including the parabolic SAR turning negative (intermediate-term) and short-term momentum shifting bearish (e.g., Stochastic RSI, CCI 14).
Growth-to-value ratios indicate a gradual short-term shift toward value stocks, reflecting a defensive market posture.
Despite the down day, accumulation/distribution increased, suggesting buying into weakness, which could indicate a pullback rather than a significant downturn.
The S&P 500 is testing key support levels (e.g., 6400) and remains above the 50-day moving average, with longer-term trends still positive.
Economic Data and Sentiment:
ISM Manufacturing came in at 48.7 (better than expected but still indicating contraction). Construction spending disappointed at -0.1% (vs. +0.2% expected).
Sentiment ticked slightly negative (from 64 to 62), with some fear returning (e.g., rising put/call ratios and volatility risk premium).
The markets are focused on upcoming employment data (Thursday/Friday) and the Federal Reserve’s potential rate decisions later this month, with a strong labor market reducing the urgency for rate cuts.
Outlook for Wednesday, September 3:
Key economic releases include MBA Mortgage Applications and Factory Orders, though Thursday and Friday (ISM Services, employment data) will be more significant.
Seasonality data suggests September is weak, with a historical negative return of -0.7% and only a 46% chance of being positive since 1964.
The S&P 500 remains below short-term overhead resistance (e.g., 6500 on the S&P) and the 20-period moving averages, with negative short-term conviction building. However, intermediate and long-term trends are still positive.
Watch for continued defensive positioning (value over growth) and potential buying on dips, as seen late Tuesday. Key levels to monitor include S&P support at 6400 and resistance at 6468.
Conclusion:
The S&P 500 is showing short-term weakness but remains in a broader uptrend. Investors are cautious due to seasonal trends and upcoming economic data, with a focus on employment reports and Fed policy. Defensive sectors and late buying suggest the market views this as a pullback rather than a major decline, but further negative momentum could challenge key support levels.

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