S&P 500 Sitting on the Technical Precipice After Stock Swoon

(Bloomberg) -- An intensifying sell-off in U.S. equities has brought the S&P 500 Index to within a hair of a key technical level.

The benchmark index tumbled 2.1 percent this week and currently sits at 2,884.05, about 30 points above its average price for the past 50 days. The level served as a support during Tuesday’s rout, but futures on the measure signal that it may be tested again Wednesday, falling by 0.5 percent as of 8:11 a.m. in New York.

Investors have been speculating on how far the trade-fomented sell-off can go ever since U.S. President Donald Trump announced over the weekend his intention to raise levies on imports from the world’s second-largest economy by this Friday. Bulls who had previously been expecting a benign outcome for trade talks have now turned their sights to the 50-day average for a reprieve.

When the S&P 500 slid below the technical support level in both October and December, losses accelerated as the gauge nearly tumbled into a bear market.

“If you were to breach that, I think that would start to worry some of the more technically oriented traders, even the at-home traders, if you will,” said Sameer Samana, senior global market strategist for Wells Fargo Investment Institute.

The set-up for an end to the sell-off looks weak. Chinese Vice Premier Liu He will arrive in the U.S. for trade talks on Thursday, seemingly leaving little time to iron out a deal that avoids a hike to tariff rates by midnight on Friday.

And the list of geopolitical hot spots has since swelled. Iran told European nations it would no longer fully comply with the terms of a 2015 accord designed to prevent the country from developing a nuclear weapon because its partners are no longer holding up their end of the bargain on oil and banking.

To contact the reporters on this story: Luke Kawa in New York at lkawa@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Randall Jensen

©2019 Bloomberg L.P.