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S&P 500 and Nasdaq 100 Can’t Shake Off the Blues as Yields Rise, Netflix Earnings Eyed

US STOCKS OUTLOOK:

  • U.S. shares flip in blended efficiency initially of the week as rising Treasury yields cut back urge for food for danger property
  • S&P 500 and Dow Jones end the day modestly decrease; Nasdaq 100 ekes out small acquire
  • This text appears on the key technical ranges for the S&P 500 and Nasdaq 100 to be careful for within the coming days.

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After swinging between constructive and adverse territory all through the day, U.S. shares completed the day largely flat, held again by rising charges throughout many of the U.S. Treasury curve on expectations that sky-high inflation will lead the Federal Reserve to aggressively take away coverage lodging over the approaching months to revive worth stability.

When it was all stated and accomplished, the S&P 500 inched down 0.02% to 4,374, extending its decline for the second consecutive session and shutting at its lowest stage in a month, with most sectors comparatively smooth, aside from vitality, which managed a strong rise. The Dow Jones, for its half, fell 0.11% to 34,411, however weak spot was restricted by a 2.56% rally in Goldman Sachs inventory costs.

Elsewhere, the Nasdaq 100, eked out a 0.13% advance due to a late day-push, ending at 13,910, however positive factors had been contained by hovering yields, with the 10-year taking pictures as much as 2.86%, its highest stage since December 2018. Rising yields weigh on corporations’ valuations by rising the speed at which future money flows are discounted, however the strain tends to be extra acute for tech and development shares whose valuations are based mostly on earnings anticipated to materialize additional down the highway.

Wanting forward, there are not any excessive affect financial information on Tuesday, so traders will stay laser-focused on the earnings season that has simply gotten underway final week. That stated, Johnson and Johnson (JNJ) and Netflix (NFLX) are two key corporations, with large market capitalizations, whose outcomes are value watching tomorrow (see desk under for consensus expectations).

Supply: Nasdaq

It’s nonetheless too early to make broad assumptions, however the reporting interval is off to an honest begin with 81.5% of S&P 500 corporations which have introduced outcomes posting better-than-forecast EPS figures in keeping with FactSet. If this pattern consolidates and corporations proceed to ship good numbers, extreme market pessimism ought to begin waning, encouraging traders to redeploy capital into danger property.

Whereas earnings are all the time key, forward-guidance is prone to be extra essential for Wall Road within the coming days and weeks. On this context, merchants ought to pay shut consideration to any feedback in regards to the outlook, earnings and the way administration is dealing with ongoing provide chain snags and surging prices. Finally, if margins stay wholesome and prospects keep constructive, sentiment may enhance, paving the way in which for a significant rebound in shares.

S&P 500 TECHNICAL ANALYSIS

Though the outlook improved barely for the S&P 500 in March, the technical image has worsened once more following current weak spot. As seen on the day by day chart, the index has misplaced its 50-day transferring common and has fallen under a key ground across the psychological 4,400 mark, each bearish indicators for worth motion. With sellers in management and no vital assist zones round present ranges, the likelihood of a retest of the October 2021 low close to 4,280 has elevated.

Alternatively, if patrons return and the index drifts increased, we’d have to see a decisive transfer and a weekly shut above the 50-day transferring common to turn into satisfied additional positive factors are doable. If this situation performs out, preliminary resistance lies at 4,495 (200-day SMA), adopted by 4,590, an space of curiosity created by a descending trendline prolonged off the document excessive.

S&P 500 and Nasdaq 100 Can’t Shake Off the Blues as Yields Rise, Netflix Earnings Eyed

S&P 500 (SPX) Chart by TradingView

NASDAQ 100 TECHNICAL ANALYSIS

The Nasdaq 100 additionally rebound aggressively in March, however the tech benchmark’s advance was stopped useless in tracks by descending trendline prolonged off the December 2021 lows. After being repelled by this technical resistance, the index dropped precipitously, hitting briefly an almost five-week low on Monday. If promoting strain intensifies within the coming days, preliminary assist rests at 13,715, the January low, however a transfer under this ground may expose the 2022 lows.

On the flip facet, if dip patrons resurface and the index costs increased, resistance seems at 14,265. If bulls handle to clear this barrier, bullish momentum may decide up, setting the stage a doable transfer in direction of trendline resistance at 14,900.

S&P 500 and Nasdaq 100 Can’t Shake Off the Blues as Yields Rise, Netflix Earnings Eyed

Nasdaq 100 (NDX) chart ready in TradingView

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—Written by Diego Colman, Market Strategist & Contributor

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