Nasdaq, S&P 500, Dow Fall: Powell’s Stance vs. Strong ISM PMI

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Updated: Feb 6, 2024, 11:15 GMT+00:00

Despite strong ISM Services PMI indicating economic resilience, Wall Street's major indexes faced declines, reflecting mixed investor sentiment.

Key Insights

Powell’s hint at no immediate rate cuts led to declines in S&P 500, Dow Jones, and NASDAQ.
Strong U.S. services sector and labor market data suggest higher rates, impacting Treasury yields and equities.
Mixed market responses reflect a balance between positive economic growth and concerns over higher interest rates.

Quick Fundamental Outlook

Wall Street’s main indexes, including the S&P 500, Dow Jones, and NASDAQ, experienced declines after Federal Reserve Chair Jerome Powell signaled that rate cuts were not on the immediate horizon, emphasizing the need for more evidence of sustainable inflation reduction.

This stance was supported by data indicating robust growth in the U.S. services sector (ISM Services PMI) and persistent strength in the labor market, which fueled speculations of sustained higher interest rates. Consequently, Treasury yields rose, further dampening investor sentiment towards equities.

Despite these challenges, the markets pared losses later in the session, reflecting investor ambivalence between welcoming strong economic growth and grappling with the implications of higher rates.

This resulted in a mixed close with the Dow Jones dropping 0.71%, the S&P 500 falling 0.32%, and the NASDAQ decreasing by 0.20%.

SPX SP500 Price Forecast

SPX SP500 – Chart

The S&P 500 (SPX)’s pivot point is at $4,954.29 with resistance at around $4,981.09, $5,011.06, and $5,045.10, suggesting potential hurdles for upward movement.

Support is found at $4,927.85, with additional levels at $4,899.56 and $4,846.62. The 50-day and 200-day EMAs, at $4,883.65 and $4,735.54 respectively, hint at a bullish trend over the longer term.

However, the upward trendline signals possible short-term support. Watching the $4,954.29 level is crucial; a breakout could trigger further buying, while failure may lead to selling pressures.

Dow Price Forecast

DJIA Chart

The Dow Jones Industrial Average’s pivot point is established at $38,284.65. Looking at the 4-hour chart, resistance levels are set at $38,493.83, $38,669.70, and $38,784.81, challenging the index’s upward momentum.

Support is found at $38,124.82, with additional safety nets at $38,002.28 and $37,847.78. The 50-day and 200-day Exponential Moving Averages (EMAs), at $38,281.12 and $37,606.48 respectively, suggest a potential for bullish momentum, supported by the Dow’s recent dip to $38,345.

This level acts as a critical juncture, indicating that a stance above it could signal buying interest, setting a bullish tone moving forward.

NASDAQ Price Forecast

NASDAQ – Chart

On the 4 hour chart, the NASDAQ’s pivot point is situated at $15,637.91. Resistance levels are delineated at $15,746.27, $15,904.66, and $16,100.00, each marking significant barriers to the index’s upward movement.

Conversely, support is found at $15,523.98, followed by $15,385.05 and $15,159.98, providing a foundation against potential declines. The 50-day and 200-day Exponential Moving Averages (EMAs) at $15,383.52 and $14,857.10, respectively, underscore a bullish undercurrent.

A notable chart pattern is the double top, which is currently reinforcing resistance near the $15,637.91 level. This formation suggests a crucial resistance point that, if surpassed, could signal a strong bullish momentum. Conversely, a failure to breach this threshold may catalyze a bearish response.

The NASDAQ stands at a pivotal threshold; a breakout above $15,637.91 could herald bullish trends, while inability to surpass may lead to selling pressures.

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

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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