The start of a week that contains early data on first-quarter growth, as well as earnings announcements from several tech titans, is expected to see US markets open down Monday. At the time of writing, the SP500 index was down half a percent, trading at around 4,240 USD, the lowest level in more than a month.
Hawkish Fed undermined stocks
On the heels of remarks by Federal Reserve Chair Jerome Powell that the Fed would explore more aggressive interest rate hikes at its May meeting and disappointing corporate reports, US equities markets had their worst single-day fall since 2020 on Friday.
The Dow and SP500 both fell 2.8 percent, while the Nasdaq fell 2.6 percent. The Dow has now declined four weeks in a row, while the SP500 has fallen for three consecutive weeks. The Dow plummeted 1.9 percent in the week, the SP500 fell 2.8 percent, and the Nasdaq fell 3.8 percent.
War in Ukraine is still ongoing
As Russia’s aggressive invasion of Ukraine entered its ninth week, UN Secretary-General Antonio Guterres was due to visit Ankara on Monday and Moscow on Tuesday in an attempt to re-energize peace talks.
Some observers hoped that a deal on leaving Mariupol or a ceasefire over Orthodox Easter would provide the crucial impetus for the discussions to succeed.
Still, Russian soldiers are “repeatedly attacking” the steel structure in Mariupol, where Ukrainian forces are holding out, according to Ukrainian presidential adviser Mykhailo Podoloyak.
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This week could be the hottest of the company earnings season, with lots of notable firms across a range of different sectors reporting results, including five of the largest technology giants in the United States, including Apple, Amazon, Microsoft, and Meta Platforms (Facebook), and Google.
The Chicago Fed National Activity Index and the Dallas Fed Manufacturing Business Index are on the agenda during the US session. However, they rarely cause any market volatility.
Supports under attack
The index fell below the important support of previous lows near 4,275 USD, confirming the strength of the bearish pressure. The short-term outlook seems negative as long as it remains below that level. The next target could be at 4,145 USD, where March lows are.
If the index drops below 4,145 USD, the long-term trend could change to bearish, targeting the 4,000 USD level.
Alternatively, the index must climb above 4,400 USD to cancel the immediate bearish momentum.