S&P 500 AND NASDAQ 100 FORECAST:

  • U.S. shares dump in the beginning of the week amid fragile market sentiment forward of key financial information and the official begin of the second quarter earnings season
  • S&P 500 slumps 1.15%, Nasdaq 100 sinks 2.2%
  • This article appears on the key technical ranges to observe for within the Nasdaq 100 over the following few days

Most Read: S&P 500, Nasdaq 100, Dow Jones Technical Forecast for this Week

U.S. shares slumped on Monday amid fragile investor sentiment on recession nervousness forward of key financial information and the official begin of the earnings season. At the market shut, the S&P 500 sank 1.15% to three,854, with communication companies, shopper discretionary and data know-how main the decline. The Nasdaq 100, for its half, plunged 2.1% to 11,860, regardless of the small pullback in U.S. Treasury yields. Meanwhile, the Dow fell 0.52% to 31,173, outperforming its friends on Wall Street, however missing the momentum wanted to complete in optimistic territory.

Looking forward, U.S. shopper worth index information, due for launch on Wednesday will steal the limelight this week. In phrases of consensus expectations, June inflation is seen rising 8.8% y-o-y from 8.6% y-o-y in May, though some analysts imagine headline CPI might hit 9%, the best degree since November 1981.

Another inflation shock, coupled with the tight labor market, might give the Federal Reserve cowl to proceed mountain climbing borrowing prices forcefully into 2023 even when Wall Street is slowly positioning for the likelihood of a coverage pivot. With the route of journey for rates of interest firmly on the rise, volatility will keep elevated, decreasing danger urge for food and stopping equities from staging a significant and sustainable comeback.

The official begin of the second quarter reporting interval can even obtain important consideration this week, with monetary outcomes from JP Morgan Chase (JPM), Morgan Stanley (MS), Wells Fargo (WFC) and Citigroup (C) being probably the most notable. Commercial and funding banks have a entrance row view of the financial system, so merchants ought to keep watch over their numbers, however particularly their steerage.

With the financial slowdown undermining demand, inflation compressing margins and the robust greenback hurting multinational earnings, quarterly efficiency and forward-looking commentary could also be a disappointment, paving the best way for important cuts in EPS projections for the broader market, a state of affairs that might spark the following leg decrease within the fairness house. Despite the rising headwinds, Wall Street analysts have but to downgrade company earnings on a broad scale, however adverse revisions may very well be simply across the nook. When that occurs, the S&P 500 and the Nasdaq 100 may very well be in for extra losses.

NASDAQ 100 TECHNICAL ANALYSIS

The Nasdaq 100 jumped final week, rising greater than 4%, however was unable to clear resistance within the 12,175/12,225 band. Upon reaching this space, costs shortly pivoted decrease and resume their descent as sellers resurfaced to fade the rally amid lack of confidence within the tech sectorโ€™s means to maintain features. If draw back stress intensifies within the coming days, preliminary assist is seen at 11,500, adopted by 11,325. On additional weak spot, the main focus shifts to the 2022 lows.

On the opposite hand, if dip consumers swoop in to choose up crushed down shares and spark a bullish reversal, the primary resistance to contemplate seems at 12,175/12,225. If costs break above this barrier decisively, the index may very well be on its solution to retest the 12,600 ceiling.

NASDAQ 100 CHART

Nasdaq 100 Chart Prepared Using TradingView

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—Written by Diego Colman, Market Strategist for DailyFX

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