Nasdaq 100, Dow Jones, S&P 500 News: Wall Street Braces for Weekly Loss Amid Inflation, Bank Woes

Market Overview

This week, Wall Street is poised for a loss as investor sentiment was dampened by a hotter-than-expected inflation report and weak quarterly earnings from major banks. The retreat in megacap growth stocks, including notable players like Nvidia, Tesla, and Meta Platforms, contributed to the downturn, with each falling over 1%.

At 16:16 GMT, the Dow Jones Industrial Average is trading 38122.15, down 336.93 or -0.88%. The S&P 500 Index is at 5143 .17, down 55.89 or -1.08% and the Nasdaq-100 Index is trading 16233.52, down 208.68 or -1.27%.

Bank Earnings

The financial sector faced significant setbacks, with JPMorgan Chase & Co leading the downturn, dropping 5.9% after projecting lower-than-expected interest income. Wells Fargo reported a 7% decline in first-quarter profits, largely due to decreased interest earnings from customers, resulting in a modest 0.4% decrease in its stock price. Similarly, Citigroup experienced a 2.8% fall after a decline in quarterly profits.

Technology Sector Struggles

The technology sector saw substantial losses, driven by concerns over supply chain disruptions. Advanced Micro Devices and Intel experienced declines of 4% and 3.6%, respectively, following reports that China intends to eliminate foreign chips from its telecom networks by 2027. This sector’s drop contributed to the broader market downturn, with the information technology index falling 1.3%.

Commodities and Safe Havens

In contrast to equities, commodities like gold surged to new highs. Spot gold reached $2,400.35, marking a nearly 3% increase for the week. This rise reflects a growing demand for safe-haven assets amidst ongoing geopolitical tensions. Energy stocks which climbed modestly in response to rising crude prices amid heightened Middle East tensions.

Federal Reserve and Economic Data

Investor focus is also on the Federal Reserve’s future actions, with the CME FedWatch Tool indicating a 56% probability of a rate cut in July. Economic indicators such as U.S. consumer sentiment and inflation expectations suggest persistent inflationary pressures, which may influence the Fed’s policy decisions.

Short-term Market Forecast

Despite recent gains, the stock market appears vulnerable to a bearish turn. With escalating inflation concerns, potential supply chain issues in tech, and disappointing bank earnings, the market may be gearing up for a correction. Traders should brace for potential volatility, as the slightest hint of adverse news could trigger a broader sell-off in the near term.

Technical Analysis

E-mini Nasdaq-100 Index futures are lower late Friday after giving up earlier gains. The tech heavy index is trading slightly below the 50-day moving average at 18252.53, putting the intermediate trend at risk.

The minor bottom at 18053.50 is a potential trigger point for an acceleration to the downside.