NASDAQ Index, SP500, Dow Jones Forecasts – NASDAQ Retreats As Tesla Dives 14%

SP500 Moves Lower As Traders Focus On Inflation Risks

SP500 is losing ground as traders focus on the strong rally in the oil markets. Brent oil climbed above the psychologically important $100.00 level as Houthis attacked Saudi oil tankers in the Red Sea. Houthis’ attacks marked a new level of escalation in the Middle East.

President Trump said that U.S. would punish Iran and Houthis, but it remains to be seen whether Houthis could be contained in the near term. Meanwhile, the Bab al-Mandab Strait could get closed together with the Strait of Hormuz.

Treasury yields tested new highs as bond traders focused on inflation risks. The yield of 2-year Treasuries climbed above the 4.36% level, while the yield of 10-year Treasuries settled above 4.70%.

FedWatch Tool indicates that traders have started to worry about a potential rate hike at the meeting next week. The probability of such a rate hike is estimated at 35.8%. The market expects that Fed will raise rates in September even if it keeps rates unchanged in July. Hawkish Fed policy outlook serves as a major negative catalyst for SP500.

Today, traders also had a chance to take a look at the Initial Jobless Claims report. The report indicated that 187,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 212,000. From a big picture point of view, the report showed that the job market remained in decent shape. The report did not provide support to stocks as traders focused on the major rally in the oil markets and worried about inflation.

Not surprisingly, energy stocks were among the biggest gainers in today’s trading session. Consumer cyclical and consumer defensive stocks were among the biggest losers amid rising inflation risks.

Currently, SP500 is trying to settle below the 7400 level. In case this attempt is successful, SP500 will head towards the nearest support level, which is located in the 7370 – 7380 range. A move below this level will open the way to the test of the next support at 7315 – 7325.

NASDAQ Dives As Tesla Drops 14%

NASDAQ is under strong pressure as Tesla and Alphabet suffer sell-offs after earnings reports. Tesla stock is down by -14% as the company’s earnings missed analyst estimates. Alphabet is down by -7% as traders worry about high AI spending.

The nearest support level for NASDAQ is located in the 28,300 – 28,350 range. A move below the 28,300 level will push NASDAQ towards the next support at 27,850 – 28,800. RSI remains in the moderate territory, so there is plenty of room to gain momentum in the near term.

Dow Jones Retreats On Hawkish Fed Policy Outlook

Dow Jones pulled back as traders focused on rising Treasury yields and reacted to the strong rally in the oil markets. Alphabet was the biggest loser in the Dow Jones index today.

In case Dow Jones declines below the support at 51,400 – 51,500, it will head towards the next support level, which is located in the 50,700 – 50,800 range.

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