S&P 500's Big Drop Raises Alarm: Is a Market Correction Looming?

◉ Fundamental Rationale:
● US stocks fell sharply on Friday, with major indices like the S&P 500 SPX and Dow Jones Industrial Average DJI experiencing significant losses.
● The sell-off was triggered by a warning from Walmart WMT, which raised concerns about weakening consumer demand, rising costs, or other challenges impacting its business. As a retail giant, Walmart's outlook is seen as a barometer for consumer health.
● The decline coincided with the release of consumer sentiment data, which dropped to a 15-month low, signalling growing pessimism among consumers about the economy.
● The market reacted to fears of inflation, rising interest rates, and the potential for a recession, which could further weigh on corporate earnings and economic growth.
● The sell-off was not limited to retail stocks but reflected broader anxieties about the economy and future market performance.

◉ Technical Observations:
● Following a significant sell-off of nearly 1.7%, the index is expected to find initial support at the trendline.
● If the index breaches this support level, the next strong support zone is anticipated in the range of 5,650 to 5,700.