S&P 500 keeps climbing as Iran deal optimism survives diplomat's pushback ahead of midterms

According to Al-Arabiya, Qatar and Pakistan put forward a compromise proposal that could open the door to an agreement. The S&P 500 rallied yesterday after that report, but the advance lost steam once a diplomat involved in the talks pushed back against accounts that a deal was close.

The S&P 500 did not give back those gains despite the pushback, as a flurry of positive headlines in recent days raised expectations for a deal before the midterm elections. If an agreement is reached, the index would probably advance to fresh record peaks on diminished inflation and rate-hike worries, along with an improved growth outlook. An extended stalemate, on the other hand, might cap further upside.

Also on this week's calendar are the US flash PMIs, with Friday the scheduled release date. Given deepening concerns about the economy, the figures will probably matter. Credit spreads are still widening, and elevated inflation compels the Federal Reserve to remain hawkish, so the market is currently without any bullish drivers.

Disappointing data would likely amplify growth worries and lead to renewed selling in the S&P 500. Numbers that beat forecasts, in contrast, could generate a short-lived relief bounce, but the broader picture would stay intact since stronger data would only reinforce the argument for higher interest rates.

S&P 500 technical analysis - daily timeframe

The S&P 500 CFD contract is now probing a broken trendline. Sellers will probably crowd in near this area, keeping their risk above the broken line as they aim for 7,500, with 7,613 the initial objective. Buyers, meanwhile, are waiting for a reclaim of the trendline before building positions aimed at fresh record highs.

S&P 500 technical analysis - 4 hour timeframe

S&P 500 technical analysis - 1 hour timeframe

The hourly chart shows a modest rising trendline that is marking the latest pullback. Should the price come down to that line, the buyers should lean on it, using risk defined below it while aiming for a breakout above resistance. Sellers, in turn, will be seeking a downside break to increase bearish exposure and extend toward new lows. Today's average daily range is outlined by the red lines.

Upcoming market catalysts

The latest US jobless claims figures are due tomorrow, and Friday will wrap up the week with the US flash PMIs.