Vanguard S&P 500 ETF price forecast after a current dip

Vanguard tracks the S&P 500 and gives you exposure to 500 of the most significant public companies in the United States.

Vanguard S&P 500 ETF remains under pressure as stocks slumped on Wall Street and the S&P 500 index logged its biggest weekly percentage drops since the onset of the pandemic in March 2020.

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U.S. policymakers finally concluded that price pressures were not just transitory, and the U.S. Federal Reserve is likely to meet market expectations for a 25-basis-point rate hike in March.

U.S. consumer prices in December had the largest annual rise in nearly four decades, and the inflation had spread more than previously expected.

Risk aversion dominated financial markets during the last trading week, and investors will watch carefully details from the Fed’s policy meeting next week. Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA LLC, added:

With the Fed poised to hike interest rates as many as four times this year, fear of a hard landing has risen among investors. But a slowing economy in the months ahead will probably give the Fed second thoughts.

Fourth-quarter earnings reporting season has begun and investors will also pay close attention to the companies’ outlooks and how U.S. companies coped with inflation, staffing, and supply-chain issues last quarter.

Next week, Johnson & Johnson, Microsoft, Boeing, AT&T, Kimberly-Clark, Intel, Apple, Tesla, Chevron, and Caterpillar are among the companies scheduled to report quarterly results.

Andrew Slimmon, a managing director at Morgan Stanley Investment Management, said that the rising inflation represents a threat to the economy, while the prospect of renewed lockdowns and rising COVID-19 cases also made investors nervous.

The U.S. continues to fight with high numbers of new daily infections, leading to staffing issues across industries; investors have seen that the virus still has the ability to disrupt business.

Bears control the price action

Vanguard S&P 500 ETF has collapsed from its record highs above $440, and according to technical analysis, bears control the price action for now.

The current support level stands at $400, and if the price falls below this level, it would be a strong “sell” signal, and the next target could be around $380.

On the other side, if the price jumps above $420, it would be a signal to trade Vanguard 500, and we have the open way to $430.

Summary

Vanguard S&P 500 ETF remains under pressure as stocks slumped on Wall Street and the S&P 500 index logged its biggest weekly percentage drops since the onset of the pandemic in March 2020. Risk aversion dominated financial markets during the last trading week, and investors will watch carefully details from the Fed’s policy meeting next week.

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