NASDAQ Index, SP500, Dow Jones Analysis – Stocks Pull Back As Yellen Warns There’s Little Time Left To Raise The Debt Ceiling

Key Insights

• SP500 tested support at 4115 as debt ceiling negotiations showed no signs of progress. 
• NASDAQ pulled back towards the 13,550 level as traders continued to take profits off the table near yearly highs. 
• Dow Jones tested new lows as the appetite for risk decreased. 

SP500

SP500 tested support at 4115 as traders remained focused on debt ceiling negotiations. U.S. Treasury Secretary Janet Yellen confirmed that U.S. government will run out of money in early June. She said that she would update Congress on the issue. While most traders believe that Democrats and Republicans will come up with a last-minute deal, worries about a potential default serve as a significant negative catalyst for stocks. In addition, debt ceiling uncertainty pushed Treasury yields higher, which served as a bearish catalyst for equities.

In case SP500 settles below the support level at 4115, it will move towards the next support at 4090. A successful test of the support at 4090 will open the way to the test of the support at 4060.

R1:4150 – R2:4175 – R3:4200

S1:4115 – S2:4090 – S3:4060

NASDAQ

NASDAQ has also moved lower as traders continued to take profits near yearly highs. It should be noted that a potential default is not priced in by the market, so traders will become even more nervous if debt ceiling deal is not announced in the next few days.

A move below the support level at 13,550 will push NASDAQ towards the next support at 13,400. In case NASDAQ declines below this level, it will head towards the support at 13,300.

R1:13,700 – R2:13,900 – R3:14,100

S1:13,550 – S2:13,400 – S3:13,300

Dow Jones

Dow Jones tested new lows amid a broad sell-off in the equity markets. The pullback was led by 3M and Boeing.

The nearest support level for Dow Jones is located at 32,800. If Dow Jones declines below this level, it will move towards the next support level at 32,600. A successful test of the support at 32,600 will push Dow Jones towards the support at 32,300.

R1:33,000 – R2:33,175 – R3:33,300

S1:32,800 – S2:32,600 – S3:32,300

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