NASDAQ Index, SP500, Dow Jones Analysis – NASDAQ Remains Under Pressure After Powell’s Comments

Key Insights

• SP500 moved away from session lows as traders bet that federal funds rate would peak at 525 – 550 bps. 
• NASDAQ is losing ground as traders continue to take profits after the strong rally. 
• Dow Jones rebounded above the 34,000 level. 

SP500

SP500 rebounded from session lows despite hawkish comments from Jerome Powell, who said that half a point of additional hikes could be expected if the economy performed as expected. Traders remain confident that Fed will not be able to raise rates by 50 bps from current levels. According to FedWatch Tool, the probability of a 550 – 575 bps federal funds rate at the end of 2023 is just 10.3%.

From the technical point of view, SP500 did not test the support area in the 4335 – 4350 range and rebounded closer to the 4400 level. A move above this level will push SP500 towards the resistance at the recent highs in the 4430 – 4450 range.

NASDAQ

NASDAQ is under pressure as traders focus on rising Treasury yields, which put pressure on the yield-sensitive tech stocks. Profit-taking after the strong rally remains an important driver for the pullback. The key question is whether bulls are ready to use the pullback as an opportunity to establish new positions at current levels. The upside trend remains strong, but traders may want to see a bigger pullback before they will be ready to get back into the market.

RSI has pulled back from the recent highs, so NASDAQ will have a good chance to gain upside momentum if the right catalysts emerge. To continue the current trend, NASDAQ needs to get above the 15,300 level.

Dow Jones

Dow Jones received support near the strong support level in the 33,785 – 33,875 range and rebounded above the 34,000 level. Dow Jones is less sensitive to the dynamics of Treasury yields so it is stronger than SP500 and NASDAQ in today’s trading session.

The nearest resistance area for Dow Jones is located in the 34,200 – 34,250 range. A move above 34,250 will open the way to the test of the next resistance in the 34,515 – 34,675 area.

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