NASDAQ Index, SP500, Dow Jones Forecasts – NASDAQ Retreats As Oil Soars Amid Middle East Tensions

SP500 Moves Lower As Oil Prices Gain 9%

SP500 is losing ground as traders react to escalation in the Middle East. President Trump said that U.S. would impose a naval blockade on Iranian ports. He also added that U.S. would charge a fee of 20% for safe passage through the Strait of Hormuz, calling the U.S. a “guardian” of the Strait. This initiative has surely puzzled U.S. allies in the region. At this point, it is not clear how the U.S. plans to collect fees and whether the country can ensure safe passage amid attacks from Iran.

Meanwhile, Iran’s allies Houthis have started to attack Saudi Arabia. Houthis’ involvement in the conflict raises worries about the Bab El-Mandeb Strait, which is also used as a route for oil exports.

Oil prices rallied 9% as traders reacted to surprising developments. In case the Strait of Hormuz is blocked again, oil prices will continue to move higher, putting additional pressure on SP500.

Treasury yields gained ground as bond traders bet on hawkish Fed. The yield of 2-year Treasuries climbed above the 4.61% level, while the yield of 10-year Treasuries settled above 4.61%. Rising Treasury yields served as an additional bearish catalyst for SP500.

Not surprisingly, energy stocks were among the biggest gainers today. Consumer defensive and utilities stocks have also gained ground in today’s trading session. Tech stocks found themselves under strong pressure as traders sold risk assets.

Currently, SP500 is trying to settle below the 50 MA at 7520. In case this attempt is successful, SP500 will move towards the nearest support level, which is located in the 7450 – 7550 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

NASDAQ Is Under Pressure As Traders Worry About Hawkish Fed

NASDAQ suffered a sell-off amid falling demand for tech stocks. Sandisk, which was down by -13.5%, was the worst performer in the NASDAQ index today. Seagate and Western Digital  have also found themselves under strong pressure.

NASDAQ settled below the 50 MA at 29,551 and is trying to settle below the 29,350 level. In case this attempt is successful, NASDAQ will move towards the next support level, which is located in the 28,800 – 28,850 range.

Dow Jones Tests The 52,400 Level

Dow Jones moved lower amid broad pullback in the equity markets. Chevron, which was up by +2.9%, was among the biggest gainers in the Dow Jones index today. The company’s shares gained ground amid strong demand for energy stocks, which was triggered by the rally in the oil markets.

From the technical point of view, Dow Jones failed to settle above the resistance at 52,700 – 52,800 and pulled back towards the 52,400 level. In case Dow Jones manages to settle below 52,400, it will move towards the nearest support, which is located in the 52,100 – 52,200 range.

On the upside, a successful test of the resistance at 52,700 – 52,800 will open the way to the test of the next resistance level at 53,300 – 53,400.

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