NASDAQ Index, SP500, Dow Jones Forecasts – Stocks Pull Back As Traders Focus On Geopolitical Tensions

SP500 Retreats As Traders Focus On Middle East

SP500 pulls back as traders take some profits off the table amid rising tensions in the Middle East.

U.S. and Iran attacked each other despite ceasefire. U.S. delivered strikes against an empty oil tanker, which was headed to Iran. The tanker attempted to get through the naval blockade of Iranian ports. In turn, Iran attacked U.S. bases in Kuwait and Bahrain. Iran has also attacked a civil airport in Kuwait, causing material damage.

Oil prices rallied as geopolitical risk premium increased. WTI oil climbed above the $96.00 level, while Brent oil settled near the $98.00 level. Rising oil prices pushed Treasury yields higher as bond traders bet on hawkish Fed. From a big picture point of view, bond traders bet that Fed will be forced to raise rates due to rising inflation, which is triggered by high oil prices.

Today, traders also focused on the ISM Services PMI report. The report showed that ISM Services PMI increased from 53.6 in April to 54.5 in May, compared to analyst forecast of 53.8. Numbers above 50 show expansion. The report indicated that the services sector remained in great shape despite high oil prices.

Not surprisingly, energy stocks were among the biggest gainers today as traders reacted to rising oil prices. Consumer defensive and healthcare stocks have also gained ground as demand for safe-haven assets increased.

Consumer cyclical and tech stocks were among the biggest losers as traders rushed to take some profits off the table.

Currently, SP500 is trying to settle below the 50 MA at 7561. In case this attempt is successful, SP500 will move towards the support level, which is located in the 7515 – 7525 range. A successful test of this level will open the way to the test of the next support at 7425 – 7435.

NASDAQ Moves Away From Historic Highs

NASDAQ pulled back as traders took profits near historic highs. Rising oil prices reduced demand for risk assets, which was bearish for NASDAQ. NVIDIA, which was down by -3.3%, was among the biggest losers in the NASDAQ index today.

NASDAQ failed to settle above the resistance at 30,800 – 30,850 and pulled back towards the 30,600 level. If NASDAQ settles below 30,600, it will move towards the support at 30,300 – 30,350. It remains to be seen whether NASDAQ will be able to gain downside momentum as traders are ready to buy pullbacks in AI-related stocks.

Dow Jones Moves Lower As Traders Take Profits Near Historic Highs

Dow Jones moved lower amid broad pullback in the equity markets. IBM, which was down by -5.9%, was the biggest loser in the Dow Jones index today. The stock pulled back as traders rushed to take profits after the strong rally.

From the technical point of view, Dow Jones attempts to settle below the 50 MA at 50,839. In case Dow Jones manages to settle below the 50 MA, it will head towards the nearest support, which is located in the 50,400 – 50,500 range. RSI is in the moderate territory, so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

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