US Stock Futures Struggle Amid Fed Uncertainty, Market Volatility

U.S. stock futures declined on Monday amid recession concerns and anticipation of key retail sales data, a crucial indicator of consumer strength. Despite Friday’s sharp rebound—where the Dow Jones Industrial Average surged 1.65%, while the S&P 500 and Nasdaq rallied 2.13% and 2.61%, respectively—all three indexes still posted weekly declines. The Dow had its worst week since March 2023, down 3.1%. The rally was driven by bargain buying in big tech stocks, including Nvidia, Tesla, Meta, Amazon, and Apple, as trade war fears temporarily eased. However, uncertainty remains over Federal Reserve policy and economic growth, with the Atlanta Fed’s GDPNow forecasting a 2.4% contraction for Q1.

The Dow remains roughly 3% away from correction territory, while the Nasdaq has already entered it, underscoring the fragile market sentiment. The broader stock market correction has dragged the S&P 500 down 10.1% since February 19. While some investors see buying opportunities, analysts remain unconvinced that the downturn is over, noting that extreme bearish sentiment has historically triggered a "Fed-Put easing response." However, the Federal Reserve is unlikely to intervene, with Chair Jerome Powell expected to maintain a cautious stance at Wednesday’s FOMC meeting. Meanwhile, Trump’s escalating tariff threats, particularly after April 2, could prolong uncertainty and deepen market volatility.

The correction has been driven primarily by falling valuation multiples, especially among the Magnificent-7 stocks, as fears over tariffs and economic slowdowns mount. While S&P 500 forward earnings per share recently hit a record high, analysts appear to be underestimating rising risks. Historically, the S&P 500 has tended to bottom when it drops more than 20% below its 200-day moving average, but it is currently down only 1.8%, suggesting further downside risk. Notably, foreign markets have outperformed the U.S., reinforcing concerns that Trump’s tariffs could disproportionately harm the domestic economy.

Morgan Stanley strategists foresee a potential rebound for the S&P 500, with the index currently testing the lower end of their projected first-half range of 5500–6100. Last Thursday, it dropped to the critical 5500 support level due to negative earnings revisions, fiscal challenges, and tariff concerns. However, sentiment indicators suggest an oversold market, with the Relative Strength Index at levels not seen since 2022. Additionally, a weaker U.S. dollar and seasonal strength could support earnings revisions. While the firm sees room for a short-term rally, uncertainty surrounding policy decisions and economic data remains a key risk.

The Dow, like other major indexes, has been impacted by ongoing economic concerns but remains a focal point due to its sensitivity to policy shifts and trade tensions. Investors are closely watching upcoming corporate earnings, with reports from Micron, Nike, and Accenture this week. Micron’s earnings, particularly in AI-driven memory chips, could offer insights into the broader tech sector.

While the central bank is expected to keep rates unchanged, investors are closely watching for signals on future cuts. Treasury Secretary Scott Bessent’s warning that a recession remains a possibility has added to the cautious sentiment. Additionally, geopolitical risks loom, with Trump’s planned talks with Russian President Vladimir Putin on the Ukraine conflict adding another layer of uncertainty. U.S.-EU trade tensions further complicate the outlook, as Trump’s tariffs on steel and aluminum have prompted European retaliation.

As a result, the US30 is currently navigating a critical juncture, with market sentiment fragile. If the index breaks below 40,800, further downside toward 40,000 is likely. However, if sentiment improves, a short-term rally toward 42,000 could unfold.

Data for Technical Analysis (30Min) CFD US30 DJIA

Resistance : 41780.8, 41786.0, 41794.4

Support : 41764.0, 41758.8, 41750.4              

30Min Outlook  

Source: TradingView                                  

Buy/Long 1 If the support at the price range 41744.0 - 41764.0 is touched, but the support at 41764.0 cannot be broken, the TP may be set around 41786.1 and the SL around 41734.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 41780.8 - 41800.8, TP may be set around 41808.0 and SL around 41754.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 41780.8 - 41800.8 is touched, but the resistance at 41780.8 cannot be broken, the TP may be set around 41764.0 and the SL around 41810.8, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 41744.0 - 41764.0, TP may be set around 41730.0 and SL around 41790.0, or up to the risk appetite.       

Pivot Points Mar 18, 2025 03:01AM GMT