Nasdaq 100, S&P 500 and Dow tumble as US inflation turns higher than expected

U.S. EQUITY OUTLOOK:

  • S&P 500, Nasdaq 100 and Dow Jones plummet after US inflation data tops estimates
  • Elevated pricing pressures in the economy could prompt the Fed to continue preloading interest rates hikes at its next monetary policy meetings
  • With market with sentiment deteriorating daily, risky assets will struggle to stage a meaningful rebound in the near term

Most read: US Dollar Price Action Setups – Preparing for a Pullback? EUR/USD and USD/JPY

U.S. stocks suffered steep losses on Wednesday amid growing headwinds for the U.S. economy and an increasingly weak appetite for risk on Wall Street. At the closing bell, the S&P 500 plunged 1.65% to 3,935, its weakest level since March 2021. The Dow Jones, for its part, fell 1.02% to 31,834, a new low of the year. Elsewhere, the Nasdaq 100 took the brunt of the selloff and fell 3.06% to 11,967 amid a major tech rout, with Apple, Microsoft and Amazon all plummeting.

Even though equity futures were trading significantly higher in the pre-market session, the optimistic feeling quirky and did a 180 degree turn after the Consumer price index in the United States for the month of April delivered another negative surprise. For context, annual The CPI has cooled at 8.3% against 8.5% in March, but the result came in two tenths one percent above expectations, a sign that broader price pressures are not yet noticeably relieved.The basic indicator also has overcome consensus forecasts, impression 6.3% year-on-year, only one slight decrease compared to the 6.5% increase recorded at the end of the first quarter.

While the directional improvement to title and base gauge are welcomeWednesday’s data was a strong reminder that the US central bank has a a long way to go and a difficult way to restore price stability.Looking ahead, favorable base effects should help to push year-on-year inflation has come down, but with the underlying trend race well above desirable levels, the Fed should hold back a warmongering bias and continue to accelerate interest rate hikes the next meetings bring monetary policy to a neutral position quickly.

Overall, with inflation at its highest level in four decades, it is possible that we do not have Again reached a peak of warmongering at the central bank Politics outlook. Against this backdrop, US Treasury yields could push higher in the short term, fueling fears of recession and weighing on investor mood. In this environment, risk appetite will remain low, preventing a meaningful rally in the equity market. In fact, we may continue to witness the recent “sale of the to tear apart phenomenon,” where traders vanish any rally lest stocks struggle to sustain their gains.

NASDAQ 100 TECHNICAL ANALYSIS

After falling significantly on Wednesday, the Nasdaq 100 broke below key support at 12,210 and fell to a fresh 2022 low near 11,967. downside, sellers may aim for the 11,600 level in the coming sessions. In case of additional weakness, the next floor to consider appears around the 11,000 mark. On the other hand, if bearish buyers return and manage to push the benchmark higher, initial resistance arrives at 12,210, followed by 12,645. If these obstacles are overcome, focus moves to the 13,000 region.

Nasdaq 100 chart prepared using TradingView

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—Written by Diego Colman, Market Strategist for DailyFX

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