US Market Outlook: Treasury Yields eye higher
Rate hikes, elevated oil price can aid the rise
The Dow Jones Industrial Average experienced a decline for the second week in a row, currently trading below its key support level of 52,200. The index has fallen further beyond the anticipated level of 51,800. S&P 500 showed a marginal decline of 0.08 per cent, while the NASDAQ Composite index ended the week on a positive note with a 0.72 per cent increase.
A divergence in the charts is evident, with the Dow Jones showing weakness, while the S&P 500 remains above its support, indicating a potential rise. The NASDAQ Composite is the most resilient among the three, with the potential for further gains. The Dow Jones could fall to 51,200-51,100 from its current position. A decisive break below 51,100 may push the index down to 50,100 and even 49,800 or 49,500 in the upcoming weeks.
Key support level of 7,500 has held well for the S&P 500 index, which has recovered most of the losses from its low around 7,508. A further rise to 7,700-7,720, a short-term resistance, could occur. However, failure to surpass 7,720 may result in a decline to 7,600-7,500. A strong break below 7,500 would indicate a bearish trend reversal.
The break below 25,900 did not last, and the index has since recovered from the low of 25,803. If the bounce sustains and the index breaks above 26,700, a rise to 27,300-27,350 or even 28,500 could be seen. The upside for the S&P 500 is likely to be capped at 27,350 or 28,500. The NASDAQ Composite's upward movement faces caution due to its potential to reach 25,000.
The dollar index (100.22) has made a bullish breakout above 99.85, with the region between 100 and 99.80 acting as a potential support zone. The outlook for the index to reach 101-101.30 is bullish, while a break below 99.80 could lead to a fall to 99-98.80. The US 10Yr Treasury Yield oscillated around 5 per cent throughout the week, with the Federal Reserve hinting at another 25-basis points rate hike for this year.
Higher crude oil prices could further aid the yield's rise to 5.15 per cent. The support level for the yield is at 4.9 per cent. If the yield breaks below this level, a fall to 4.8 per cent is possible first, followed by an eventual rise back above 5 per cent.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
