NASDAQ Index, SP500, Dow Jones Forecasts – Stocks Rebound As Fed Keeps Rates Unchanged

SP500 Rebounds As Traders Focus On Warsh’s Comments

SP500 rebounded from session lows as traders reacted to Fed Interest Rate Decision and comments from Fed Chair Warsh.

Fed decided to leave the federal funds rate unchanged, in line with analyst estimates. Three Fed members voted for a hike, while nine members voted to keep rates at current levels. In its statement, Fed noted that it “will deliver price stability”.

During the press conference, Warsh indicated that Fed was worried about inflation and added that the central bank would not hesitate to act if necessary. It should be noted that Warsh’s comments were rather hawkish, but traders were happy that Fed did not raise rates today. However, the market continues to expect a rate hike at the next meeting in September. FedWatch Tool indicates that there is a 62% probability of a rate hike in September.

Today, traders also focused on the strong rally in the oil markets. Oil prices were up by 7% as Iran attacked U.S. forces in Jordan. President Trump said that U.S. would hit Iran hard. Put simply, markets prepare for another round of escalation in the Middle East. The short respite lasted just four days, highlighting the complicated nature of any negotiations in the current environment.

Not surprisingly, energy stocks were among the biggest gainers in the SP500 index today. Tech stocks remained under pressure amid valuation worries.

Currently, SP500 is trying to settle back above the resistance at 7450 – 7460. In case this attempt is successful, SP500 will head towards the next resistance level, which is located in the 7510 – 7520 range. On the support side, a move below the 7400 level will push SP500 towards the nearest support at 7370 – 7380.

NASDAQ Moves Away From Session Lows

NASDAQ has also managed to rebound from session lows as some traders were ready to buy the dip in tech stocks. However, traders remain focused on valuation of AI-related stocks. Micron, which was down by -7%, was among the biggest losers in the NASDAQ index today.

A successful test of the resistance level at 27,850 – 27,900 will open the way to the test of the next resistance at 28,300 – 28,400. RSI is in the moderate territory, so there is plenty of room to gain upside momentum in the near term. On the support side, NASDAQ needs to settle below the support at 27,400 – 27,450 to gain downside momentum in the near term.

Dow Jones Is Losing Ground As Caterpillar Dives 6%

Dow Jones remained under pressure after Fed decision as most stocks in the index moved lower. Caterpillar, which was down by -6%, was the biggest loser in the Dow Jones index today. The stock suffered a sell-off as Baird downgraded Caterpillar from Outperform to Neutral.

If Dow Jones climbs above the 52,200 level, it will head towards the next resistsance at 52,700 – 52,800. On the support side, a move below the 51,800 level will push Dow Jones towards the nearest support, which is located in the 51,500 – 51,600 range.

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