NASDAQ Index, SP500, Dow Jones Forecasts – Stocks Retreat As Oil Prices Test New Highs

SP500 Tests Support At 6780 – 6790

SP500 is losing ground as traders focus on the strong rally in the oil markets, which is driven by the war in the Middle East.

WTI oil climbed above the $80.00 level as Iran intensified strikes against oil-producing countries in the region. U.S. and Israel continued strikes against Iran, but the latter maintained attacking capabilities.

From a big picture point of view, traders have started to price in a potentially long war in the Middle East. High oil prices may put significant pressure on global economy, which is bearish for stocks.

In addition, high energy prices may trigger another wave of inflation and force the Fed to be more hawkish. Not surprisingly, Treasury yields continue to move higher. The yield of 2-year Treasuries climbed towards the 3.60% level, while the yield of 10-year Treasuries moved towards 4.15%. Rising Treasury yields put additional pressure on SP500 today.

Traders also focused on the Initial Jobless Claims report, which indicated that 213,000 Americans filed for unemployment benefits in a week. The job market remains in decent shape, but traders are mostly focused on geopolitical developments and dynamics of energy markets.

Energy stocks managed to gain some ground today as traders reacted to the rally in oil and natural gas markets. Other sectors found themselves under strong pressure.

Basic materials stocks were among the biggest losers today as traders focused on pullbacks in precious metals and copper markets.

Currently, SP500 is trying to settle below the support at 6780 – 6790. In case this attempt is successful, SP500 will head towards the next support, which is located near recent lows at 6710 – 6720. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

NASDAQ Retreats As Traders Sell Chip Stocks

NASDAQ pulled back as the appetite for risk declined. Chip stocks were among the biggest losers in the NASDAQ index today.

Interestingly, the rebound in software stocks continued. Atlassian and Intuit managed to gain strong momentum.

NASDAQ pulled back towards the 50 MA at 24,916 and declined towards the support at 24,700 – 24,750. A move below the 24,700 level will push NASDAQ towards the next support at 24,200 – 24,250. On the upside, a move above the 50 MA will open the way to the test of the nearest resistance at 25,200 – 25,250.

Dow Jones Is Under Pressure As Traders React To The Rally In The Oil Markets

Dow Jones tested new lows amid broad pullback in the equity markets. Falling demand for industrials and consumer stocks pushed the index below the support level at 47,900 – 48,000.

Most stocks in the Dow Jones index were losing ground in today’s trading session. Salesforce, which was up by 4.8%, was the biggest gainer in the index. The stock gained ground as the rebound in software stocks continued.

If Dow Jones stays below the 47,900 level, it will head towards the support, which is located in the 47,100 – 47,200 range. RSI is close to the oversold territory, but there is enough room to gain momentum in the near term.

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