NASDAQ Index, SP500, Dow Jones Forecasts – NASDAQ Tests New Lows As Traders Sell AI Stocks

SP500 Attempts To Settle Below 7400

SP500 moved away from session highs as traders focused on PMI data and reacted to the pullback in the oil markets.

Manufacturing PMI decreased from 53.9 in June to 53.8 in July, compared to analyst forecast of 54.3. Services PMI grew from 51.2 to 53.6, compared to analyst consensus of 51.5. Numbers above 50 show expansion.

The strength of the services sector provided support to Composite PMI, which increased from 51.9 to 53.6, exceeding the analyst estimate of 52.3.

Today, traders also had a chance to take a look at the New Home Sales report for June. The report indicated that New Home Sales increased by +1.6% on a month-over-month basis, compared to analyst consensus of +3.4%.

Oil prices pulled back by -3.5% as traders took some profits off the table after the strong rally. Some traders are ready to bet on de-escalation, although U.S. and Iran have shown no desire to continue negotiations.

Treasury yields moved lower as bond traders focused on the pullback in the oil markets. The yield of 2-year Treasuries declined towards the 4.33% level, while the yield of 10-year Treasuries settled near 4.67%. It should be noted that Fed policy outlook remains hawkish, and the market expects that Fed will raise rates in September.

Real estate stocks were among the biggest gainers today as traders reacted to the pullback in Treasury yields. Consumer defensive and healthcare stocks have also managed to gain upside momentum. Tech stocks found themselves under strong pressure amid valuation worries.

SP500 failed to settle above the resistance level at 7450 – 7460 and pulled back towards the 7400 level. In case SP500 manages to settle below 7400, it will head towards the nearest support level, which is located in the 7370 – 7380 range. A move below the 7370 level will open the way to the test of the support at 7315 – 7325. RSI is in the moderate territory, so there is plenty of room to gain additional downside momentum in the near term.

NASDAQ Pulls Back As Sandisk Dives 12%

NASDAQ tests new lows as traders stay worried about valuation of AI-related stocks. Sandisk, which was down by -12%, was among the biggest losers in the NASDAQ index today. Intel  declined by -8% despite beating analyst estimates on both earnings and revenue. Intel’s pullback highlights market’s desire to take some profits off the table in tech stocks.

Currently, NASDAQ is trying to settle below the support level at 28,300 – 28,350. In case this attempt is successful, NASDAQ will move towards the next support level at 27,850 – 27,900.

Dow Jones Moves Higher Amid Rising Demand For Defensive Sectors

Dow Jones gained ground amid rising demand for consumer and healthcare stocks. Tech stocks in the Dow Jones index also managed to gain upside momentum.

Salesforce, which was up by +4.4%, was the biggest gainer in the Dow Jones index today. The company’s shares gained ground as demand for software stocks increased amid worries about valuation of AI-related stocks. Software stocks have been under strong pressure this year as traders worried that AI would destroy business models of software companies.

The nearest resistance level for Dow Jones is located in the 52,100 – 52,200 range. A successful test of this level will push Dow Jones towards the 52,800 level.

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