Nasdaq entered a correction as fears for growth loom
Nasdaq has freefallen 10% in two weeks, the year-long uptrend for S&P 500 is also entering a consolidation
Nasdaq entered a correction as fears for growth looms
US equity market's risk-averse sentiment pushed the Nasdaq Composite into correction territory on Wednesday trading session. It looks like the fear over shrinking earning capability amid the potential tightening monetary policy evoked widespread doubt about the tech stocks that used to enjoy the fastest growth and the highest price-to-earnings valuation.
The recent turbulence in tech stocks, triggered by a spike in yields, which continued to send the 10-year U.S. Treasury yield to a high of 1.9%---26% higher than where it started this year. As a result, Nasdaq has freefallen 10% in two weeks, from 16589 on January 4th to 15030 on Wednesday this week. Nearly all the tech giants slipped: since the start of 2022, Amazon (NASDAQ: AMZN) lost 6.45%, Apple (NASDAQ: AAPL) and Alphabet (NASDAQ: GOOGL) dropped 8.6% and 8.2%, respectively.
From a technical standpoint, the shape of a downward trajectory has emerged to see the index potentially move further down to 14573 if the risk-off sentiment elevates. At the same time, the level of 14936 might provide some support before the floor level. On the other hand, if the Fed chooses to soothe the market in the next FOMC meeting end of the month, the index may shrug off the haze and eye on 15671.
Source: IG
S&P 500 fell below multiple key supports
S&P 500 fell for a second day finished Wednesday trading session under 200-days moving average for the first time since October. The index dipped by 1%, dragged mainly by technology and struggling bank stocks.
From the technical chart, it looks like S&P has also broken through the lower boundary of the upward moving band since August. Also enhancing the bear view is the leg down from the second “shoulder” from the head shoulder shaped formed since Dec 6th. Both indicators have cemented the view that the year-long uptrend for S&P is entering a consolidation. Moreover, a correction can be in prospect should the index move towards the 4318 level.
SOURCE: IG
Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
