Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

S&P 500 plunges below key supports as Fed signals higher rates, what’s next?

US stocks plunge after the Federal Reserve signaled that interest rates would remain higher for an extended period, despite keeping rates on hold in the September meeting.

Source: Bloomebrg

What the Fed says and what that means


In the highly-anticipated FOMC September meeting, the US central bank maintained its 2023 interest rate target range at 5.25% to 5.5%, suggesting that one more hike before the end of the year is almost certain.


At this stage, it appears that the possibility of a December hike is much higher than that of November, with the CME Fedwatch suggesting probabilities of 46% and 23%, respectively.


What disappointed the market the most is policymakers' anticipation of reduced-size monetary easing in the following year, with the median forecast for the federal funds rate expected to stay above 5% in 2024—a substantial increase from the June projection of 4.6%.

The quarterly-updated economic projections also indicated a lower expectation for core PCE-measured inflation by the end of 2023, forecasting that it will drop below 3% next year and return to the 2% target by 2026. The good news is that what appeared to be a distant possibility of a 'soft landing' for the US economy just three months ago now seems attainable, as the Fed raised its 2024 GDP growth target from 1.1% to 1.5%.

S&P 500 technical analysis


The Federal Reserve's commitment to keeping rates higher for longer has notably dampened risk appetite for US stocks, dragging the S&P 500 to trade below its two critical support levels: the 100-day SMA and the April-September trendline.


A further downtrend towards the August low at 4340 appears quite likely for now, potentially resulting in additional losses toward the critical 4288 level. In August 2022, this level triggered a sharp decline for two full months, resulting in an 18% broad-based decline.


On the flip side, buyers would need a close above the previous trendline near 4453 to restore their confidence; however, the 20 and 50-day moving averages (MA) are also close by, potentially acting as significant resistance at that level.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.