US Market Outlook: Indices knocked down
Dollar and Treasury Yields also give up their gains
The Dow Jones managed to hold steady last week, but the S&P 500 and NASDAQ Composite saw steep declines. The S&P 500 dropped 1.95 percent, while the NASDAQ Composite plummeted about 4.5 percent. The market appears weak, with the Dow Jones near a crucial resistance level and both the S&P 500 and NASDAQ with more room to fall. Last week, the Dow Jones achieved its 52,500 resistance level, only to retreat since.
If it fails to surpass this mark, the downtrend will continue. A drop below 51,500 could trigger a further decline to 50,500, followed by a potential slide to 50,000-49,500. To refute the bearish outlook, the Dow Jones must surpass 52,500, potentially reaching 53,300 and even 54,000. However, such a rise seems improbable. Surprisingly, the S&P 500 index has fallen sharply, breaching its support level of 7,730.
Support clusters exist in the 7,635-7,600 range. A bounce from this area could provide some relief, potentially pushing the index back up to 7,700 and 7,800. However, a break below 7,600 would increase selling pressure, dragging the S&P 500 down to 7,500-7,450 or even 7,300. A close watch is required on the price action in the 7,635-7,600 region this week.
The sharp decline below 27,000 has diminished the likelihood of the 28,300-28,500 support range. Between 26,900 and 27,000, the index could encounter resistance, capping upward movement. As long as the index stays below 27,000, the outlook remains negative. The NASDAQ Composite may plummet to 25,500 and even 25,000. A sustained rise above 27,000 is necessary to revive the probability of the index reaching 28,300-28,500.
The dollar index (101.78) failed to maintain its breakout above 102.50 last week, peaking at 102.95 after an inflation data release and then plummeting. The near-term outlook is unfavorable, with the dollar index potentially falling to 101.30-101.20. The strong support lies between 101.30 and 101. A drop below 101 is unlikely. As such, we can anticipate the dollar index to rebound higher within the 101.30-101 support zone, potentially taking it to 103.50 over the medium term.
This outlook will only turn negative if the index dips below 101, in which case a decline to 100.40-100.30 could occur. Our preference is for the dollar index to hold above 101 and continue its upward trajectory. The US 10-year Treasury yield (5.08 percent) has plummeted, breaking below the critical support level of 5.2 percent.
The short-term outlook is negative, with the 10Yr Treasury Yield testing 5-4.95 percent on the downside. After this decline, the yield could reverse higher again and resume its long-term uptrend, possibly reaching 5.35 percent initially. It could also open the path to 5.6 percent in the medium term.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
