SP500 Tests Support At 7720 – 7730 As Traders Focus On CPI Report
SP500 is losing ground as traders focus on higher-than-expected inflation data. Inflation Rate increased from 3.4% in August to 3.7% in September, compared to analyst forecast of 3.6%. High energy prices have also boosted Core Inflation Rate, which increased from 2.4% to 2.6%.
Interestingly, the markets continues to believe that Fed will not raise rates at the meeting in October. According to FedWatch Tool, the probability of a rate hike has increased to 37.1%. That said, traders expect that Fed will be forced to raise rates in December and January.
Treasury yields moved away from session highs as traders have started to buy bonds despite inflation data. The yield of 2-year Treasuries settled near 4.80%, while the yield of 10-year Treasuries pulled back towards 5.18%. The pullback in Treasury yields did not provide any support to stocks in today’s trading session.
Healthcare and consumer defensive stocks were among the biggest gainers today as demand for safe-haven assets increased. Energy stocks have also managed to gain some ground as traders remained focused on tensions in the Middle East.
Tech stocks found themselves under strong pressure as traders rushed to take profits in AI shares amid worries about hawkish Fed. Basic materials stocks pulled back as silver markets suffered a strong sell-off after the release of inflation data.
Currently, SP500 is trying to settle below the support level at 7720 – 7730. In case this attempt is successful, SP500 will head towards the next support, which is located in the 7615 – 7625 range. RSI is close to the oversold territory, but there is enough room to gain momentum in the near term.
NASDAQ Is Under Strong Pressure
NASDAQ is under strong pressure as investors’ appetite for risk declined after higher-than-expected inflation data. Software and chip stocks are among the biggest losers in the NASDAQ index today. Traders worry that Fed’s rate hikes will raise the price of capital for tech companies, which need billions of dollars to invest in AI.
From the technical point of view, NASDAQ settled below the support at 30,200 – 30,250 and is trying to settle below the 30,000 level. If NASDAQ settles below 30,000, it will head towards the next support, which is located in the 29,700 – 29,750 range. RSI is in the oversold territory, so the risks of a rebound are increasing.
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See all Dow Jones forecastsDow Jones Attempts To Rebound From Session Lows
Dow Jones is losing some ground amid broad pullback in the equity markets. However, rising demand for healthcare and consumer stocks has provided some support to the Dow Jones index today.
Currently, Dow Jones attempts to settle below the 50 MA at 51,461. A move below the 50 MA will push Dow Jones towards the support at 51,100 – 51,200. On the upside, Dow Jones needs to settle back above the 51,700 level to have a chance to gain upside momentum in the near term. In this case, Dow Jones will head towards the 52,000 level. A move above 52,000 will push Dow Jones towards the resistance at 52,300 – 52,400.
For a look at all of today’s economic events, check out our economic calendar.
