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Wall Street closes in red dragged by technology

  • Losses seen in the FAANG group weighs on Nasdaq.
  • Trade worries pull investors away from risky assets.

Major equity indexes in the U.S. fell on Monday as rising concerns over the trade conflict between the United States and China continued to weigh on the market sentiment. The CBOE Volatility Index, Wall Street's fear gauges, rose nearly 12% to reflect the risk-off mood.

Earlier today, Bloomberg claimed that a 10% tariff on $200 billion worth of Chinese imports could be announced as early as Monday. In an interview with CNBC, White House economic advisor Kudlow argued that Trump administration's trade reform efforts wouldn't hurt the economy. Finally, President Trump told reporters that they would announce new tariffs after the closing bell. 

Dragged by sharp losses seen in the FAANG (Facebook, Amazon, Apple, Netflix, Google) the risk-sensitive S&P 500 Technology Index closed the day 1.4% lower. "There's the overhang of a potential trade war, which is obviously what's keeping the market suppressed. When you see some of these names that have been up 40, 50, 60 percent year-to-date, taking some profit is the prudent thing to do," Oliver Pursche, chief market strategist at Bruderman Asset Management in New York, told Reuters.

The Dow Jones Industrial Average dropped 91.43 points, or 0.35%, to 26,063.24, the S&P 500 fell 16.11 points, or 0.55%, to 2,888.87 and the Nasdaq Composite lost 113.44 points, or 1.42%, to 7,896.61.

DJIA technical outlook via FXStreet Chief Analyst Valeria Bednarik

The DJIA fell for a second consecutive day, holding above a bullish 20 DMA, but settling a lower low and a lower high. In the daily chart, the Momentum indicator remains directionless around its 100 level, as the index trades within familiar levels, while the RSI extends its slow retracement from overbought readings,  but holds above its 50 level, still indicating a limited downward potential.

Shorter term, and according to the 4 hours chart, the bearish case mounts, as the index broke below its 20 SMA, anyway directionless, while technical indicators have pierced their midlines, now heading lower right below them. 

Support levels: 26,032 - 25,974 - 25,922.

Resistance levels: 26,130 - 26,189 - 26,228.

Author

Eren Sengezer

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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