NASDAQ Index, SP500, Dow Jones Forecasts – NASDAQ Retreats As Retail Sales Stall In December

SP500 Pulls Back From Session Highs

SP500 is losing some ground as traders focus on the weaker-than-expected Retail Sales report. The report showed that Retail Sales were unchanged in December, while analysts expected that they would grow by +0.4%. Retail Sales Ex Autos were also unchanged on a month-over-month basis.

Treasury yields moved lower as bond traders bet on dovish Fed after the weak Retail Sales report. The yield of 2-year Treasuries pulled back towards the 3.45% level, while the yield of 10-year Treasuries declined towards 4.15%. Falling Treasury yields did not provide support to major indices as traders were cautious ahead of tomorrow’s Non Farm Payrolls report.

The Non Farm Payrolls report is expected to show that the U.S. economy added 70,000 jobs in January. Unemployment Rate is projected to remain unchanged at 4.4%. These reports will likely have a major impact on market dynamics, so traders should be prepared for volatility.

Utilities and Real Estate stocks were among the biggest gainers today as traders reacted to the pullback in Treasury yields. Basic materials stocks have also managed to gain ground despite the pullback in precious metals markets.

Financial stocks declined amid fears about AI competition. Traders fear that AI solutions will disrupt the wealth management industry.

SP500 failed to settle above the 6990 level and pulled back towards the nearest support, which is located in the 6940 – 6950 range. If SP500 pulls back below the 6940 level, it will head towards the 50 MA at 6921. A move below the 50 MA will push SP500 towards the next support at 6870 – 6880.

NASDAQ Moves Lower Amid Profit-Taking

NASDAQ is moving lower as traders take some profits off the table after the strong rebound and prepare for the Non Farm Payrolls report.

Western Digital and Seagate are among the biggest losers in the NASDAQ index today. Traders take some profits off the table after the strong rally, which was fueled by AI-driven demand for companies’ products.

Palantir  declined by 3.5% amid valuation worries. From a big picture point of view, traders stay worried about sky-high valuations of AI-related companies.

Currently, NASDAQ is trying to settle below the support at 25,200 – 25,250. In case this attempt is successful, NASDAQ will move towards the next support level, which is located in the 24,700 – 24,800 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

Dow Jones Tested Historic Highs

Dow Jones tested historic highs near the 50,500 level but lost momentum and pulled back.

Disney, which was up by 2.8%, was the biggest gainer in the Dow Jones index today. The stock continues to rebound after the sell-off, which was triggered by the earnings report.

JPMorgan and Goldman Sachs were among the losers in the index amid worries about the impact of AI on the financial industry.

Dow Jones benefits from sector rotation as traders move away from the tech sector and buy stocks that have previously underperformed.

From the technical point of view, Dow Jones continues its attempts to settle above the resistance at 50,100 – 50,200. In case Dow Jones manages to stay above the 50,200 level, it will move towards recent highs near the 50,500 level. A move above 50,500 will push Dow Jones towards the 51,000 level.

On the support side, a move below the psychologically important 50,000 level may trigger a wave of profit taking. In this scenario, Dow Jones will head towards the nearest support, which is located in the 49,500 – 49,600 range.

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