SP500 Retreats As Oil Prices Gain 4%
SP500 is losing ground as traders focus on the sell-off in the AI sector and react to the strong rally in the oil markets.
Oil prices are up by +4% as traders bet that U.S. could restart its military operation against Iran. President Trump has recently noted that U.S. did not need to use nuclear but could use the “Mother of all Bombs” to strike Iran. According to recent reports, Iran believes that a new round of U.S. – Iran war is imminent. Rising oil prices will boost inflation and force the Fed to raise rates, which is bearish for stocks.
CoreWeave‘s problems put significant pressure on major indices today. Traders focus on debt problems in the AI sector. Rising oil prices, which would push interest rates higher, serve as an additional bearish catalyst for AI stocks. AI companies are dependent on debt financing. Rising interest rates hurt their cash flows and may lead to some kind of a debt crisis in the sector.
Today, traders also had a chance to take a look at the Industrial Production report for September. The report showed that Industrial Production increased by +0.7% month-over-month, compared to analyst forecast of +0.4%. The report did not have a material impact on market dynamics as traders focused on key drivers.
Energy stocks rallied as traders focused on rising oil prices. Utilities and consumer defensive stocks have also moved higher as demand for safe-haven assets increased. Tech stocks found themselves under strong pressure in today’s trading session.
The nearest support level for SP500 is located in the 7615 – 7625 range. If SP500 manages to settle below the 7615 level, it will head towards the next support, which is located in the 7515 – 7525 range. RSI is close to oversold territory, but there is enough room to gain additional downside momentum in the near term.
NASDAQ Dives As Traders Rush To Sell AI Stocks
NASDAQ is under strong pressure as traders sell tech stocks. CoreWeave is the biggest loser in the NASDAQ index today. Memory stocks have also gained strong downside momentum.
Currently, NASDAQ is trying to settle below the support level at 29,250 – 29,300. In case this attempt is successful, NASDAQ will head towards the next support, which is located in the 28,800 – 28,850 range.
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See all Dow Jones forecastsDow Jones Attempts To Settle Below 52,000
Dow Jones moved lower amid broad pullback in the equity markets. However, rising demand for safe-haven assets provided some support to the Dow Jones index. The rally in Chevron also served as a positive catalyst for Dow Jones.
From the technical point of view, Dow Jones failed to settle above the resistance level at 52,300 – 52,400 and pulled back below the 52,000 level. In case Dow Jones settles below 52,000, it will head towards the nearest support level, which is located in the 51,600 – 51,700 range. A successful test of this level will open the way to the test of the next support at 50,700 – 50,800.
For a look at all of today’s economic events, check out our economic calendar.
