NASDAQ Index, SP500, Dow Jones Forecasts – Major Indices Remain Under Strong Pressure

Key Insights

• FedWatch Tool shows that there is a 6.7% chance of a 50 bps rate hike by the end of the year. 
• NASDAQ slides as traders focus on rising Treasury yields. 
• Dow Jones dips towards 34,300 amid broader market pullback.

SP500

SP500 pulls back as traders stay focused on the recent comments from Fed Chair Jerome Powell. Yesterday, Powell was rather hawkish, so Treasury yields moved higher. The yield of 10-year Treasuries settled above the 4.45% level, while the yield of 30-year Treasuries moved above 4.55%. FedWatch Tool indicates that there is a 38.4% probability that Fed will raise the federal funds rate by 25 bps at the meeting in December. Importantly, traders believe that there is a 6.7% chance the the federal funds rate would be raised to 6.00% by the end of the year. This is a significant change in expectations, so it’s not surprising to see that major indices are moving lower.

It should be noted that RSI has settled in the oversold territory, so the risks of a rebound are increasing. In addition, SP500 settled near the support at 4335 – 4350, so some traders will likely bet on a technical rebound from current levels.

NASDAQ

NASDAQ has also suffered a sell-off as traders focused on rising Treasury yields and hawkish comments from Fed Chair Powell. The pullback was broad, and the majority of NASDAQ components moved lower.

RSI is in the oversold territory so NASDAQ will likely get support near the 14,560 – 14,680 area.

Dow Jones

Dow Jones declined towards the 34,300 level amid a broad pullback in the equity markets.

From the technical point of view, Dow Jones may get some support near the 34,000 level if the pullback continues. A move below 34,000 will open the way to the test of the support at 33,600 – 33,700.

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