NASDAQ Index, SP500, Dow Jones Forecasts – Stocks Retreat As Retail Sales Report Boosts Treasury Yields

Key Insights

• SP500 is under pressure after strong Retail Sales data. 
• NASDAQ is moving lower as traders focus on rising Treasury yields. 
• Dow Jones pulled back towards the 37,150 level amid a broad pullback in the equity markets. 

SP500

SP500 is losing ground as traders react to the better-than-expected Retail Sales report, which indicated that Retail Sales increased by 0.6% month-over-month in December. The report highlighted the strength of the U.S. economy, so traders reduced their bets on a dovish Fed. Treasury yields moved higher, which was bearish for SP500. The yield of 2-year Treasuries rallied above 4.35%, while the yield of 10-year Treasuries settled above 4.10%. Today, traders also focused on Industrial Production report, which showed that Industrial Production increased by 0.1% month-over-month in December, compared to analyst consensus of 0%. NAHB Housing Market Index increased from 37 in December to 44 in January as mortgage rates declined by more than 110 basis points from the highs that were reached back in October. At this point, good news are bad news for markets as they boost the case for a more hawkish Fed. In addition, Houthis’ attacks on vessels in Red Sea may boost global inflation, which is also bearish for stocks.

SP500 is currently trying to settle below the support at 4730 – 4750. In case this attempt is successful, SP500 will move towards the next support level at 4575 – 4600, although it may also receive some support near the 4680 level.

NASDAQ

NASDAQ is under pressure as traders focus on Fed policy outlook. High interest rates are bearish for growth stocks, so it’s not surprising to see that traders take profits near historic highs.

From the technical point of view, NASDAQ moved below the 50 MA at 16,687 and is heading towards the support at 16,400 – 16,500.

Dow Jones

Dow Jones is under pressure amid a broad sell-off in the equity markets. Caterpillar, which is down by 3.5%, is the worst performer in the Dow Jones index today. The stock is losing ground as traders react to weak economic data from China.

In case Dow Jones settles below 31,150, it will get to the test of the nearest support level at 36,900 – 37,000.

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