Nasdaq Index, Dow Jones, S&P 500 News: Bearish Technical Breakdown Indicates Further Weakness

Dow Jones and Market Outlook

The financial markets are poised for a rebound after the Dow Jones Industrial Average’s significant drop on Thursday, falling approximately 530 points, marking its most significant decline since March 2023. This downturn represents the fourth consecutive session of losses, with a potential weekly loss of around 3%, the worst since March 2023.

At 11:10 GMT, Dow futures are trading 38989.00, up 73.00 or +0.19%. S&P 500 Index futures are at 5213.00, up 15.75 or +0.30% and Nasdaq-100 Index futures are trading 18143.25, up 66.50 or +0.37%.

S&P 500 and Nasdaq Composite Trends

Both the S&P 500 and Nasdaq Composite experienced declines, dropping 1.23% and 1.4% respectively. This downturn followed a surge in crude oil prices and comments by Minneapolis Federal Reserve President Neel Kashkari, who raised concerns over lowering interest rates in the face of persistent inflation.

Rate Cut Speculations and Jobs Report Anticipation

The trading community is closely monitoring the possibility of a rate cut in June, with the CME Group’s Fed Watch tracker indicating an increased likelihood. Meanwhile, the focus shifts to the upcoming jobs report, where economists expect a slowdown in job additions, with an estimate of 200,000 new jobs in March. Wage growth is also a critical factor, anticipated to rise by 0.3%.

Investor Sentiment and Market Reaction

Investor optimism, as measured by the American Association of Individual Investors, has shown a slight decline but remains above the historical average for the 22nd consecutive week. However, this optimism is tempered by caution, with the market reacting sensitively to Federal Reserve actions and data releases. The upcoming payroll report is particularly significant, providing insight into inflationary pressures through wage growth data.

Short-Term Market Forecast

In the short term, the market is expected to experience some consolidation, especially after strong returns in the first quarter. This consolidation phase, while indicative of a potential modest pullback, is seen as a normal fluctuation within an overall upward trend. The focus now is on the balance between cautious optimism among investors and the critical economic data that will shape Federal Reserve policies and market trends.

Technical Analysis

E-mini S&P 500 Index futures are under pressure after crossing to the weakside of a rising wedge earlier in the week. The downside momentum created by the move has triggered a sharp break, making the market vulnerable to a near-term correction into the uptrending 50-day moving average at 5153.88.

Look for a technical bounce on the first test of this intermediate trend indicator. Should it fail to hold as support then traders should anticipate a further decline.