NASDAQ Index, SP500, Dow Jones Forecasts: Post-Holiday Declines Amid Fed Uncertainty

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Updated: Jan 4, 2024, 13:57 GMT+00:00

U.S. stock indexes, including the S&P 500, Dow Jones, and NASDAQ, experienced declines in the first two sessions of 2024.

S&P 500 marks worst two-day start since 2015, reflecting cautious investor sentiment.
NASDAQ and Dow Jones also down, influenced by mixed Federal Reserve minutes.
Tech giants like Nvidia, Apple, Tesla drop amidst market uncertainty.
Airline stocks decline due to rising oil prices, impacting overall market.
Citigroup rises, bucking the trend on positive analyst outlooks.

Quick Fundamental Outlook

U.S. stock indexes, including the S&P 500, Dow Jones, and NASDAQ, experienced declines in the first two sessions of 2024. This downturn follows a strong finish in 2023, spurred by expectations of aggressive rate cuts due to cooling inflation.

However, Federal Reserve minutes showed increased confidence in controlling inflation and concerns about overly restrictive policies, without clarifying the timing of rate cuts. Rate-sensitive stocks like Nvidia, Apple, and Tesla fell, while airline stocks dropped due to rising oil prices.

Citigroup, however, rose following positive analyst reports. This cautious market sentiment reflects uncertainty about the Fed’s rate cut schedule and its impact on the economy.

SPX SP500 Price Forecast

SPX SP500 – Chart

On January 4th, the S&P 500 Index (SPX) experienced a downturn, closing at 4704.82 with a 0.80% decrease. This movement indicates a cautious market sentiment amid varying global economic factors. The SPX’s current pivot point is $4,737, serving as a key level for future price direction. Immediate resistance levels are situated at $4,797, $4,853, and $4,915, which could pose hurdles for any bullish trend.

Support levels at $4,699, $4,642, and $4,600 will be crucial in preventing further declines. The Relative Strength Index (RSI) is at 44, suggesting a slightly bearish market mood. Additionally, the SPX trading below its 50-Day Exponential Moving Average (EMA) of $4,673 further indicates a bearish inclination.

A notable chart pattern is the double bottom around the 4700 mark, aligning with the 38.2% Fibonacci retracement level. This pattern might provide support and could lead to a bullish reversal if sustained.

In conclusion, while the SPX shows bearish tendencies in the short term, especially below the $4,737 pivot point, it also presents potential for an upward correction if it sustains above this crucial level.

Dow Price Forecast

Dow Jones – Chart

The Dow Jones Industrial Average (DOW) experienced a slight uptick on January 4th, closing at 37,471.8 with a marginal gain of 0.13%. The technical outlook for the DOW is currently navigating through key levels, with a pivotal point at $37,522. Resistance levels are positioned at $37,802, $38,007, and $38,268, marking potential barriers for upward momentum.

Conversely, immediate support levels are at $37,353, $37,121, and $36,816, which could prevent further declines. The Relative Strength Index (RSI) stands at 38, indicating a bearish sentiment, as it is below the neutral threshold of 50. Additionally, the DOW’s position relative to its 50-Day Exponential Moving Average (EMA) of $37,513 suggests a neutral to bearish trend.

A key technical pattern observed is the upward channel’s breakout at $37,500, which may signal a downtrend if the DOW remains below this level. Overall, the short-term outlook for the DOW appears bearish, particularly if it stays below the $37,500 mark, suggesting potential downside risks in the immediate future.

NASDAQ Price Forecast

NASDAQ – Chart

The NASDAQ, as of January 4th, experienced a downward shift, closing at 14,592.21 with a 1.06% decrease. This decline places the index at a crucial technical juncture. The current pivot point is established at $14,753, with resistance levels at $14,992, $15,257, and $15,447. These levels are critical in determining the potential for an upward trend reversal.

Support levels are identified at $14,482, $14,273, and $14,058, providing crucial thresholds to buffer against further decline. The Relative Strength Index (RSI) is at 35, indicating a bearish market sentiment. Additionally, the NASDAQ’s position below its 50-Day Exponential Moving Average (EMA) of $14,651 reinforces the bearish trend.

A key technical observation is the upward channel’s breakout at $14,725, suggesting a continued bearish trajectory if the NASDAQ remains below this level. Overall, the short-term forecast for NASDAQ appears bearish, particularly below the $14,725 mark, indicating potential for continued downward movement in the near future.

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About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.