DJIA and S&P 500 slip on Monday, technology lifts Nasdaq

Wall Street ends choppy session mixed.
Energy and financials underperform.
Technology rebounds sharply on Monday ahead of this week's earnings reports.

Eren Sengezer FXStreet

Boosted by the upbeat performance of Asian and European equity indexes, Wall Street started the week on a positive note but failed to preserve its momentum. With both the 2 and 10-year Treasury yield curves flattening to their lowest level since early October, the S&P 500 Financials Index lost more than 2% and weighed on the financial-heavy Dow Jones Industrial Average.

Moreover, falling crude oil prices amid concerns over a weak demand outlook in 2019 continued to drag commodity-related shares lower and the S&P 500 Energy Index fell 1.1%.

On the other hand, ahead of the critical earnings of tech-giants - Amazon and Google this week and Facebook and Apple next week - the S&P 500 Technology Index, which rose as much as 1% during the day, closed 0.8% higher to keep the Nasdaq afloat in the positive territory.

Commenting on the choppy market action, "It's going be a cautious situation. Revenues have been a little bit disappointing, and because of that you don't have what we've had the past few earnings reporting cycles and that's that enthusiasm. People are looking at the negatives and saying that it's a situation where there are more headwinds," Alan Lancz, president at Alan B. Lancz & Associates Inc, an investment advisory firm, based in Toledo, Ohio, told Reuters.

The Dow Jones Industrial Average erased 126.86 points, or 0.5%, to 25,317.48 on Monday and the S&P 500 dropped 11.9 points, or 0.43%, to 2,755.88. Meanwhile, the Nasdaq Composite gained 19.60 points, or 0.26%, to close at 7,468.63.

DJIA technical outlook via FXStreet Chief Analyst Valeria Bednarik

The daily chart for the DJIA shows that the early advance was contained by sellers aligned around the 100 DMA, where the index was also contained last Friday. In the same chart, technical indicators remain near oversold levels, with the RSI heading marginally lower, currently at around 35, maintaining the risk skewed to the downside.

In the 4 hours chart, the index accelerated its decline after failing to overcome a now bearish 20 SMA, while technical indicators hold within negative levels, but with divergent directional strength. The bearish case would seem firmer on a break below 25,234, the daily low.

Support levels: 25,297 - 25,234 - 25,174.

Resistance levels: 25,378 - 25,429 - 25,485.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.

Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations

Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.

BoJ recap: A pause for now... but Japan has entered a new inflation phase

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.