Dow Jones Forecast: DJIA shed more than 1000 points
- After rallying more than 430 points, DJI shed more than 1000 points.
- Walgreen Boots and Walmart are putting a significant dent in DJI.
- Amid the lack of events, markets will look at the broader situation for fresh impetus.
After Tuesday’s rally, DJIA shed more than 820 points at 12:50 PM ET.
After two consecutive quarterly results from Target and Walmart, markets resumed significant selling raised investor concerns about increasing inflation.
The Dow fell on renewed concerns about increasing inflation dragging on economic development, as many large retailers announced lower-than-expected quarterly earnings owing to mounting cost pressures.
Given the level of macroeconomic uncertainty, few experts are ready to forecast the end of selling after a brutal first five months of the year for risky assets.
On Tuesday, Federal Reserve Chair Jerome Powell told the Wall Street Journal that the US central bank would maintain “pushing” on rate rises until inflation falls in a “clear and persuasive way”. If that does not happen, the Fed will move more aggressively.
After being questioned by reporters about the dollar’s recent strengthening, US Treasury Secretary Janet Yellen stated on Wednesday that the US remained dedicated to a market-determined dollar price.
Yellen told reporters ahead of a G7 finance ministers meeting in Bonn that tighter US monetary policy and risk aversion were factors favoring dollar gain but that having a market-determined exchange rate was the “best regime.”
The price-weighted average is expected to fall the most at Walgreens Boots and Walmart. Shares of Walgreens Boots WBA, -7.39 percent and Walmart WMT, -6.17 percent are adding to the index’s intraday loss.
Walgreens Boot’s shares are down 6.7 percent, while Walmart shares are down 6.6 percent, resulting in a 77-point drag on the Dow.
Coca-Cola KO contributed -5.75 percent, Home Depot HD contributed -5.39 percent, and Procter & Gamble PG contributed -4.43 percent to the fall.
It is worth noting that a $1 shift in any of the index’s 30 components results in a 6.59-point change.
DJIA key events
Today, we had MBA Mortgage Applications, Building Permits, and Housing Starts on the data front.
Amidst the lack of data today, the market will focus on predictions of a “hard landing” of the US economy, growing geopolitical tensions, and the Fed’s aggressive rate.
Dow Jones Price Technical Analysis: Down the hill, we go
The DJIA price forecast remains in red territory as the index has lost more than 2.80% so far.
The 4H chart shows a bearish momentum. The price is below the 20, 50, 100, and 200 SMAs.
DJIA is now hitting the 31762.90 level. A fall below 31641.10 will bring the index towards the 31224.20 support level. If the Dow dips below this level again, it will challenge the next support level at 311336.78.
On the upside, the index can go towards the next resistance level, around 3224.90. A break over 32644.60 will pave the door for a test of the following resistance level of 32754.80.
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