NASDAQ Index, SP500, Dow Jones Forecasts – Stocks Retreat From Session Highs

Key Insights

• SP500 declined towards the 4850 level as traders took some profits off the table near record highs. 
• NASDAQ moved below the 17,400 level.
• Dow Jones made an attempt to settle above 37,800 but lost momentum and pulled back. 

SP500

SP500 pulled back from session highs as traders took some profits off the table after the strong rally. Today, traders focused on CB Leading Economic Index report, which showed that Leading Economic Index declined by 0.1% month-over-month in December. Houthis have recently claimed that they attacked U.S. military cargo ship in Gulf of Aden, sending oil prices to new highs. Supply chain disruptions boost inflation, so Fed may be forced to keep rates at current levels in case prices start to move higher because of Houthis’ attacks on vessels. At this point, SP500 did not show strong reaction to the news, but traders should closely monitor oil prices to see whether markets have started to price in the recent developments in the Middle East. Archer Daniels Midland, which is down by 22.5%, is the biggest loser in SP500 today. The stock is under pressure as the company’s CFO was placed on administrative leave during an accounting probe.

In case SP500 pulls back below the 4850 level, it will head towards the nearest support, which is located in the 4810 – 4820 range.

NASDAQ

NASDAQ has also moved away from session highs amid profit-taking. Gilead Sciences, which was down by 10.5%, was the biggest loser in the NASDAQ index today.  The stock gained downside momentum as the company’s lung cancer drug trial failed.

RSI remains in the overbought territory, and there is plenty of room to gain additional downside momentum in the near term.

Dow Jones

Dow Jones pulled back below the 38,000 level as major indices moved away from session highs. Home Depot was down by 1.8% as traders reacted to an analyst downgrade.

The nearest support level for Dow Jones is located in the 37,750 – 37,800 range. A move below 37,750 will push Dow Jones towards the next support at 37,400 – 37,500.

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