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.

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