US indexes recover modestly, quiet ahead of Fed

Wall Street bounced after Monday's slump, still in the red for the week.
US Federal Reserve expected to raise rates, but uncertainty surrounds the dot-plot.

Following a strong start to the day, US indexes entered in consolidation mode mid-US session, to end anyway with gains, but off their daily highs. The Dow Jones Industrial Average managed to add 116 points, to end the day at 24,727.27, partially reversing Monday's slump. Gains in the Nasdaq and the S&P were modest, with the indexes advancing 0.275 and 0.15% respectively, with the positive tone backed by the energy-related sector, as oil prices surged to their highest this month.

The later consolidative mode is probably due to the upcoming US Federal Reserve meeting, as the central bank is expected to announce its latest decision on monetary policy this Wednesday. A rate hike has been priced in ever since Fed's head Powell pledged for 4 rate hikes this year in his testimony before the Parliament, although it's yet to be seen whether this is the first of three or the first of four for this 2018. The dot-plot will be scrutinized, and any sign that the Fed is still thinking of three hikes for this year, will probably benefit local shares, but at the same time hit the greenback.

In the meantime, the Facebook scandal continued in the eye of the storm, with shares for the company falling for a second consecutive day, an accumulating an over 10% decline ever since the week started.

Technical outlook

Technically, the daily chart for the Dow shows that the downward pressure eased just partially, as the Momentum indicator aims to bounce from its 100 level but remains pretty much neutral, while the RSI hovers around 45, but the index remains well below its 20 and 100 DMAs, with the shortest aiming to extend below the largest, both around 24,960. Shorter term, and according to the 4 hours chart, the index presents a neutral-to-bearish stance, as intraday advances were contained by a modestly bearish 20 SMA, while technical indicators hold directionless within negative territory.

Support levels: 24,670 24,612 24,561

Resistance levels: 24,805 24,860 24,913

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