NASDAQ Index, SP500, Dow Jones Forecasts – NASDAQ Retreats As Tesla Dives 14%
Treasury yields tested new highs as bond traders focused on inflation risks. The yield of 2-year Treasuries climbed above the 4.36% level, while the yield of 10-year Treasuries settled above 4.70%.
FedWatch Tool indicates that traders have started to worry about a potential rate hike at the meeting next week. The probability of such a rate hike is estimated at 35.8%. The market expects that Fed will raise rates in September even if it keeps rates unchanged in July. Hawkish Fed policy outlook serves as a major negative catalyst for SP500.
Today, traders also had a chance to take a look at the Initial Jobless Claims report. The report indicated that 187,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 212,000. From a big picture point of view, the report showed that the job market remained in decent shape. The report did not provide support to stocks as traders focused on the major rally in the oil markets and worried about inflation.
Not surprisingly, energy stocks were among the biggest gainers in today’s trading session. Consumer cyclical and consumer defensive stocks were among the biggest losers amid rising inflation risks.
Currently, SP500 is trying to settle below the 7400 level. In case this attempt is successful, SP500 will head towards the nearest support level, which is located in the 7370 – 7380 range. A move below this level will open the way to the test of the next support at 7315 – 7325.