US STOCKS OUTLOOK:
- S&P 500, Nasdaq 100 and Dow Jones lengthen losses after Wednesday’s decline
- There are not any main financial releases till Tuesday subsequent week, so sentiment ought to proceed to dictate market path
- This text seems on the key technical ranges to look at for within the Nasdaq 100 over the following few days
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U.S. equities had been subdued Thursday as sentiment remained fragile after Wednesday’s monster sell-off. Shares struggled for path and swung between positive factors and losses for a lot of the session, however ultimately headed decrease in late buying and selling regardless of a 5% drop within the VIX, with dip patrons not taking the bait on fears that threat belongings might proceed to retreat within the close to time period.
On the closing bell, the S&P 500 dipped 0.58% to three,900, ending barely above the day’s worst ranges, when it got here inside a whisker of retesting its 2022 low. In the meantime, the Dow Jones dropped 0.75% to 31,253, as Salesforce, Visa and 3M Firm misplaced greater than 1%. For its half, the Nasdaq 100 fell 0.44% to 11,875, regardless of the pullback in long-term US Treasury yields.
The bearish catalyst remained the identical: rising fears that the U.S. financial system is headed for a tough touchdown, partly because of the Federal Reserve’s aggressive tightening cycle aimed toward curbing runaway worth pressures. The chance of a near-term recession, coupled with stubbornly excessive inflation, is probably one of the main threats for US companies and their earnings.
Whereas company earnings have been resilient throughout the ongoing reporting interval, there are indicators that their margins are starting to compress amid rising value pressures. Demand additionally seems to be weakening as falling actual revenue challenges the buyer. To date, nonetheless, now we have not seen any vital downgrades in earnings estimates, however financial institution analysts might quickly start to mark down their projections if the financial setting continues to deteriorate. This poses a critical threat to shares.
Trying forward, the financial calendar is skinny till Tuesday subsequent week, when the S&P World will launch this month’s preliminary US manufacturing and companies PMIs. Within the absence of key knowledge till then, sentiment ought to proceed to drive worth motion on Wall Avenue, however with morale broken and uncertainty rising, the broader outlook stays biased to the draw back for equities – a state of affairs that complicates the restoration prospects for the S&P 500, Dow, and Nasdaq 100.
NASDAQ 100 TECHNICAL ANALYSIS
After the current rout, the Nasdaq 100 is at present hovering barely above its 2022 low positioned at 11,692, a serious technical assist for the index. With promoting urge for food on the rise, a retest of that space might be across the nook. On a retest, you will need to watch how costs react, however a break decrease might amplify bearish sentiment, setting the stage for a transfer in the direction of 11,000, the following key flooring. On the flip aspect, if patrons return and push the worth larger, preliminary resistance seems round 12,220. On additional energy, the main target shifts as much as 12,575.
NASDAQ 100 TECHNICAL CHART
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—Written by Diego Colman, Market Strategist for DailyFX