On Thursday, S&P 500 dropped -1.10%, slipping to 4482, the level it last witnessed in October 2021.
- The 10-year Treasury fell by 3.5 points during the Asian session.
- Tech stocks suffer the most as NASDAQ is down by 10%.
- Investors hold off their bond selling as the stock market drops
S&P 500 fundamental forecast
On Thursday, the US stock market sank for the third day in a row, driven by technology firms.
The S&P 500 plummeted to its lowest level in three months, with consumer and industrial sectors also falling strongly. Dow Jones and NASDAQ stocks also tumbled.
Treasury yields ups and downs
Treasuries rose for the third day in a row, as a strong sell-off in global markets pushed stockholders to seek shelter in bonds and reduce their wagers on Federal Reserve rate rises.
By mid-session in Tokyo, benchmark 10-year US yields had fallen 3.5 to 1.7755 %, down more than 12 basis points from Wednesday’s two-year peak.
Yields on the five-year, 20-year, and 30-year decreased for the third day in a row, while two-year yields fell for the second day and momentarily went below 1%.
NASDAQ dips
Following a poor earnings announcement from Netflix, tech companies are trading down on Friday, adding to the main averages’ falls during regular trade.
Netflix shares fell 19% in extended trading on Thursday after the company’s fourth-quarter earnings release revealed a slowdown in subscriber growth.
The market is buzzing about the index’s recent drop from previous highs, driven mostly by worries of a more hawkish Fed, being an overreaction, and about dip-buying.
The Ukrainian crises
Stock markets also fell on geopolitical fears following news that the United States has allowed weaponry transfers from Baltic NATO countries to Ukraine to deter a Russian assault.
The NASDAQ composite was on course to restore Wednesday’s sharp losses, then it shifted gears and took the wind out of the market’s sails.
Geopolitical news isn’t helping amid increased market volatility, especially considering the jitters around the start of the year.
Key data releases from the US
On the calendar front, we have Treasury Secretary Yellen’s speech.
What’s next?
While inflation will continue to be a recurring topic, there is a strong case for inflation rotation rather than broad-based price acceleration.
With this in mind, the research identifies the biggest risk to this prediction is a hawkish shift in central bank policy – particularly if post-pandemic dislocations persist, such as more delays in China reopening or ongoing supply chain concerns.
S&P 500 technical analysis: key levels in action
S&P 500 has been trading in red for the past week. The index dipped -1.10% on Thursday.
The index is below its 100-day MA on the daily chart, and the MACD is pointing downwards. It suggests a mild bearish trend.
So far, the index has lost -3.91% since the start of the week, and a break below 4475 would open the door to 4422. If it can cross that level, we’ll see the index touching 4400.
On the flip side, the next resistance for the index lies around 4636. If the index manages to go above this level, it can go towards 4664.