Dow Jones Outlook:
- US stocks started the week on re-evaluation of market monetary policy amid rising price pressure in the economy
- The Dow Jones fell 0.45% to 36,068 but recovered from its worst daily level in late trading as dip buyers emerged
- All eyes will be on the US CPI data on Wednesday to get a clue on the inflation outlook
most Read: S&P 500 Forecast for the Coming Week
US stocks retreated on Monday, but ended the day from their lows As dip buyers emerge to blunt the sell-off This initially triggered a sharp pullback in the most speculative corners of the market, such as stocks with tech and long cash-flow periods.
At the closing bell, Dow Jones (DJI) fallen 0.45. So far% to 36,068, while the S&P 500 (SPX) declined 0.14% to 4,670, Elsewhere, Nasdaq 100 (ndx) wiped out a 2.7% drop And the US Treasury managed to climb 0.14% to 15,614 when rates fell below their highs.
During the session, US 10-year yields briefly jumped 1.80%, its highest level since January 2020, accumulating 28 basis pointss increase in six days. Nominal rate hike is a headwind for technology and growth share with Overvaluation, but this becomes a problem for the broader market when short-term volumes ups and downs is bullish and is more than 2 standard deviations above the average, which is what we are seeing now.
In the coming days, Wall Street is likely to stayFeather as a defensive merchants Continue to hedge downside risk amid continuing monetary policy reassessment rising face Inflation is partly driven by supply chain disturbances.
Focusing on inflation, the US Bureau of Labor Statistics will release the latest Consumer Price Index report on Wednesday. Analysts to expect December Headline CPI To accelerate from 6.8% y/y to 7.1% y/y, its fastest speed since 1982. a hot print Will to raise bet That federal Reserve will take back Habitat faster and more aggressively than initially expected Catchmounting inflation forces, For now, investors see fed To raise the borrowing cost by three times in 2022, but the fourth increase, with quantitative tightening (balance sheet runoff), Huh slowly creeping in, bet on over-generalizationpathWill put upward pressure on the Treasury curve, refueling cross-market volatilityand hurting expensive stocks Trade on wealthy multiples.
In the current environment, technology and development drama Will War and stay biased towards the bottom, But, he value oriented Sectionis likely to stabilize and start commanding StrengthOnce Veins become cold and dust settles, especially if the economy performs as expected and spreads above capacity. Value stocks are generally more cyclical in nature and yield gains as bond yields rise.,Unless Speed is measured. All this suggests that the blue-chip Dow Jones is well located Outperform the Nasdaq 100 and the S&P 500 in the coming weeks and months.
Dow Jones Technical Analysis
The Dow Jones hasn’t remained untouched by the current sell-off,The index declined over the past few days after hitting an all-time high last Tuesday, closing on Wall Street. next Recent pullback, price is approaching channel support near 35,500. Traders should keep a close watch on this technical area, as a move below it could consolidate bearish momentum and pave the way for a test of the 200-day simple moving average. ,34.850.
On the other hand, if buyers gain control of the market and the Dow moves higher, the first resistance to watch out for could be seen at 36,200. if the bulls manage reclaim At this level, the next upside target is 36,5 . appears on50 and then at 36,935, the index’s record.
dow jones technical chart
Dow Jones chart created in TradingView
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— Written by Diego Coleman, contributor