NASDAQ Index, SP500, Dow Jones Forecasts – NASDAQ Dives As Inflation Rate Jumps To 4.2%

SP500 Retreats as Traders React To CPI Report

SP500 is losing ground as traders focus on CPI report and bet on hawkish Fed. Inflation Rate increased from 3.8% in April to 4.2% in May, in line with analyst estimates. Core Inflation Rate grew from 2.8% to 2.9%, compared to analyst consensus of 2.9%.

Energy prices were the key driver for rising Inflation Rate. The report met analyst estimates but showed that inflationary pressure increased. As a result, Inflation Rate reached levels that were last seen back in the first half of 2023.

Treasury yields moved higher as bond traders bet that Fed will be forced to raise rates to fight inflation. The yield of 2-year Treasuries settled above the 4.13% level, while the yield of 10-year Treasuries tested the 4.55% level. Worries about hawkish Fed put significant pressure on SP500.

Today, traders also focused on rising oil prices. WTI oil gained 2% as President Trump said that the U.S. will hit Iran hard. Traders worry that the Strait of Hormuz would not be reopened in the near term. This scenario is bearish for stocks as it will push inflation higher and force the Fed to raise rates.

The pullback is broad, and most market sectors have found themselves under pressure in today’s trading session. Basic materials stocks are among the biggest losers today as traders react to the strong sell-off in the oil markets.

Energy stocks gained ground as traders reacted to recent developments in the Middle East. Consumer defensive stocks have also gained upside momentum amid rising demand for safe-haven assets.

Currently, SP500 is moving towards the nearest support level, which is located in the 7260 – 7270 range. In case SP500 declines below the 7260 level, it will head towards the next support, which is located in the 7170 – 7180 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

NASDAQ Pulls Back Ahead Of Oracle’s Earnings Report

NASDAQ pulls back as traders are worried about rising inflation and high valuation of tech stocks.

As it often happens in markets, almost every trader was waiting for a pullback, but when the pullback occured, they were caught off guard.

Oracle‘s earnings report, which will be released today after market close, will test market sentiment in the tech space. If Oracle’s report disappoints, NASDAQ may find itself under more pressure.

NASDAQ pulled back below the support at 28,750 – 28,800 and is heading towards the 28,500 level. In case NASDAQ settles below 28,500, it will move towards the next support level at 28,250 – 28,300.

Dow Jones Dives As Traders Worry About Hawkish Fed

Dow Jones is losing ground amid broad pullback in the equity markets. Caterpillar, which is down by -6.5%, is the worst performer in the Dow Jones index today. The stock pulled back as traders reacted to the CPI report.

From the technical point of view, Dow Jones settled below the support at 50,400 – 50,500 and declined towards the psychologically important 50,000 level. A successful test of this level will open the way to the test of the next support at 49,700 – 49,800.

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