WALL STREET INDEXES DECLINE AMID STRONG US ECONOMIC DATA

For the second consecutive day, the main Wall Street indexes experienced a downturn on Tuesday, with the Dow Jones Industrial Average (DJIA) leading the decline. This drop comes despite robust US Factory Orders and JOLTS Jobs Opening data, signaling a complex market sentiment.

In February, orders for US-manufactured products surged by 1.4%, surpassing expectations of a mere 1% increase after a 3.8% decline in the previous month. Moreover, job openings in the US rose from 8.748 million to 8.756 million, surpassing market forecasts of 8.74 million. These figures affirm a strong economic outlook for the US and underscore a tight labor market condition, which deviates from the anticipated scenario for initiating interest rate cuts.

GOLD PRICE NEARS RECORD HIGHS

Investor sentiment regarding the possibility of a rate cut in June has been rattled by this data, leading to an uptick in US yields and the US Dollar, while equity markets saw a downturn.

In Tuesday’s morning trade, the Dow Jones Index dipped by 1.23% to 39,078, with the health sector taking the lead in losses, declining by 1.98%. This was fueled by reports indicating that the Biden administration’s efforts to increase Medicare rates fell short of investors’ expectations. The Consumer Discretionary sector also experienced a 1.62% decline. However, the Energy and Utilities sectors managed to stay above opening levels, with gains of 0.53% and 0.24%, respectively.

Among individual stocks, United Health Group (UNH) witnessed the most significant decline, plummeting by 7.6% to $452.73, followed by Intel (INTC), trading 2.06% lower at $43.60. Conversely, Dow Inc (DOW) saw a 0.55% increase to $58.58, while Verizon Communications (VZ) rose by 0.4% to $42.45.

TECHNICAL ANALYSIS

From a technical perspective, the Dow Jones Index appears to be undergoing a corrective phase while maintaining its broader bullish trend. Price action has breached the 50% Fibonacci retracement of the March rally at 39,300 and is now approaching the support level around 39,000. Further support lies at the trendline level of 38,835.

Looking ahead, the 39,300 level, which previously served as support, may now act as resistance, potentially hindering further upside movement and redirecting focus towards the key psychological level of 40,000. Investors are advised to closely monitor these technical levels for potential shifts in market dynamics.