SPX

NASDAQ Index, SP500, Dow Jones Forecasts – Stocks Dive As CPI Data Busts Rate-Cut Hopes

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Key Insights

  • SP500 settled below 4950 as traders reacted to the higher-than-expected inflation reports. 
  • NASDAQ found itself under strong pressure as Treasury yields rallied after the release of CPI reports. 
  • Dow Jones suffered a sell-off as traders prepared for a more hawkish Fed.

SP500

SP500 130224 4h Chart

SP500 is under strong pressure as traders react to U.S. inflation reports. Inflation Rate increased by 0.3% month-over-month in January, compared to analyst consensus of 0.2%. Core Inflation Rate grew by 0.4%, compared to analyst consensus of 0.3%. Put simply, inflation is raising its ugly head again. Traders have quickly adjusted their views on Fed policy, and FedWatch Tool indicates that markets do not expect rate cuts until June. Treasury yields tested new highs as bond traders rushed out of their long positions after inflation data. The yield of 2-year Treasuries moved above 4.65%, while the yield of 10-year Treasuries settled near 4.30%. Not surprisingly, the sell-off is broad, and all market segments are under pressure. The pullback is led by the yield-sensitive Real Estate and Utilities stocks.

SP500 has recently moved below the support at 4960 – 4970. RSI is close to the oversold territory, but there is enough room to gain additional downside momentum. In case SP500 stays below the 4940 level, it will head towards the support at 4900 – 4910.

NASDAQ

NASDAQ 130224 4h Chart

NASDAQ retreats as traders focus on rising Treasury yields. The unexpected inflation data triggered a wave of profit-taking in tech stocks. Just five stocks in the NASDAQ index managed to gain some ground in today’s trading session.

The nearest support level for NASDAQ is located in the 17,450 – 17,500 range. In case NASDAQ declines below the 17,450 level, it will head towards the next support, which is located in the 16,950 – 17,000 range.

Dow Jones

Dow Jones 130224 4h Chart

Dow Jones pulled back towards the 38,100 level amid a strong sell-off in the equity markets. Traders rush to take money off the table near historic highs.

A successful test of the support at 38,100 – 38,150 will open the way to the test of the next support level at 37,750 – 37,800.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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