US stock index futures fell sharply overnight, pulling back after Monday’s recovery. The selling accelerated as Europe opened for business. Yesterday, US stock indices began the session under severe selling pressure but then recovered as the day progressed. This turnaround saw the NASDAQ and Russell 2000 add 0.4% and 0.9% respectively on the day, while the S&P 500 ended unchanged and the Dow slipped 0.2%.
This morning’s selloff was a tad deeper than yesterdays and time will tell if this again turns out to be a ‘buy the dip’ opportunity. Tech and small caps have led this morning’s decline, with the NASDAQ down 2.5% and the Russell off 2.8%. The Dow was down 1.8% at the time of writing, while the S&P 500 had fallen 2% and had broken under yesterday’s low of 6,759.
Yet still nothing has broken technically to the downside. The S&P will need to experience a significant and protracted break below 6,730, not just on the futures, but during the main market session as well, to suggest that the market may have topped. Otherwise, the bulls may see another buying opportunity, and one that could eventually take out the high and resistance at 7,000.
Source: TN Trader
All this is irrespective of how the US-Israeli war against Iran proceeds, although it is adding to uncertainty. It’s probably fair to say that the market consensus is that the bulk of the action will be over by the end of this month.
Although what happens after that is anyone’s guess. But it’s worth bearing in mind that there were already concerns about US equity markets prior to this latest geopolitical upheaval. These included worries over AI in terms of negative effects on a host of services, return on investment, future unemployment and so on.
In fact, like yesterday, some of the heftiest individual stock losses this morning are across tech, semiconductors and ‘Mag 7’ stocks. Add in worries about private credit with last week’s bankruptcy of Market Financial Solutions, a reminder of last year’s First Brands/Tricolor blow-ups, and there’s still plenty to worry about, even without a war in the Middle East.
