Uncertainty over Russian mutiny and Fed policy dampens U.S. stocks

U.S. stocks closed lower on Monday as investors remained cautious due to the uncertainty surrounding the recent mutiny in Russia. The Technology, Consumer Goods, and Healthcare sectors experienced losses, leading to a decline in shares. The overall market sentiment was also affected by concerns about the Federal Reserve's monetary policy.

Investors have been pushing stocks lower in recent trading sessions due to concerns surrounding the Federal Reserve's aggressive stance on interest rates, which raises worries about a potential economic recession. On Friday, tech stocks weakened, causing the Nasdaq to break its eight-week upward trend, while the S&P ended a five-week winning streak.

Significant declines in the main indexes were driven by growth stocks, including Meta Platforms Inc, Alphabet Inc, and Tesla Inc. These stocks played a major role in the market's downturn, following a slowdown in U.S. stocks during the previous week.

The Nasdaq, heavily influenced by technology stocks, experienced the sharpest decline at 1.16%, contributing to major U.S. stock indexes ending in the red. However, the blue-chip Dow only saw a slight decrease, thanks to the consumer discretionary and industrials sectors, which helped limit its losses.

Real estate, transportation, materials, and small-cap stocks outperformed the broader market, indicating that economically sensitive sectors were performing relatively well. The failed mutiny in Russia dampened risk appetites and highlighted potential cracks in President Vladimir Putin's hold on power.

Despite the geopolitical concerns, market sentiment was primarily influenced by inflation and policy considerations rather than fears related to international events. The modest increases in traditional safe-haven assets such as gold, bonds, the yen, Swiss franc, and U.S. dollar on Monday had minimal impact.

The energy sector experienced gains, rallying 2.2% as oil prices rose. Traders were keeping a close watch on Europe for any signs of oil supply disruptions. However, concerns about global demand growth and potential supply disruptions due to political instability in Russia balanced the market sentiment.

The Federal Reserve is determined to steer interest rates back towards the targeted 2% annual rate. Economic data, including consumer confidence, new home sales, durable orders, weekly jobless claims, and the gross domestic product (GDP) reading, which is scheduled for Thursday, will provide further insights into the economic situation.

Market participants are currently anticipating a 25 basis points rate hike by the central bank in July, with a 76.9% probability according to CME's FedWatch tool. Most policymakers expect at least two more quarter-point rate increases by the end of the year, although traders are betting on only one hike in July, as indicated by the tool.

Data for Technical Analysis (5H) CFD US 500 [S&P 500]

Resistance : 4343.7, 4347.7, 4354.1

Support : 4330.9, 4326.9, 4320.5                         

5H Outlook

Source: Investing.com              

Buy/Long 1 If the support at the price range 4325.9 - 4330.9 is touched, but the support at 4330.9 cannot be broken, the TP may be set around 4346.3 and the SL around 4321.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 4343.7 - 4348.7, TP may be set around 4360.0 and SL around 4326.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 4343.7 - 4348.7 is touched, but the resistance at 4343.7 cannot be broken, the TP may be set around 4329.5 and the SL around 4353.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 4325.9 - 4330.9, TP may be set around 4315.0 and SL around 4348.0, or up to the risk appetite.       

Pivot Points Jun 27, 2023 02:39AM GMT

Sources: Investing 1, Investing 2