NASDAQ Index, SP500, Dow Jones Analysis – Stocks Retreat As Debt Ceiling Talks Continue

Key Insights

• SP500 pulled back as traders focused on debt ceiling negotiations. 
• NASDAQ declined below the 13,800 level as traders took some profits off the table near yearly highs. 
• Dow Jones tested support at 33,175 amid a broad pullback in the equity markets.

SP500

SP500 pulled back as traders focused on the challenging debt talks. President Joe Biden and House Speaker Kevin McCarthy failed to reach a consensus deal on Monday. Debt talks between Democrats and Republicans will continue today. Traders also focused on the flash readings of PMI reports for May. Composite PMI increased from 53.4 in April to 54.5 in May, but Manufacturing PMI declined from 50.2 to 48.5. Numbers below 50 show contraction. The weakness of the manufacturing sector was seen in most developed economies, which could be a recession sign.

The nearest support level for SP500 is located at 4150. If SP500 declines below this level, it will move towards the next support at 4115. A successful test of this level will push SP500 towards the support at 4090.

R1:4175 – R2:4200 – R3:4215

S1:4150 – S2:4115 – S3:4090

NASDAQ

NASDAQ pulled back from yearly highs as traders took some profits off the table amid debt ceiling uncertainty. The pullback was led by Zoom, which declined by 7% despite beating analyst estimates on both earnings and revenue.

In case NASDAQ settles below the support at 13,700, it will move towards the next support level, which is located at 13,550. A move below this level will push NASDAQ towards the support level at 13,400.

R1:13,900 – R2:14,100 – R3:14,300

S1:13,700 – S2:13,550 – S3:13,400

Dow Jones

Dow Jones declined amid a broad pullback in commodity markets. The strong performance of Chevron stock, which gained 3% after buying PDC Energy, did not provide enough support to Dow Jones as the majority of the index components moved lower.

If Dow Jones settles below the support at 33,175, it will move towards the next support level at 33,000. A successful test of this level will open the way to the test of the support at 32,800.

R1:33,300 – R2:33,500 – R3:33,800

S1:33,175 – S2:33,000 – S3:32,800

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