Skip to content

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

Dow Jones, S&P 500 gain as bank sector volatility cools ahead of the Fed

Nasdaq/Dow ratio sinks the most since SVB’s collapse; cooling bank volatility firms 25bps Fed rate hike bets Dow and the S&P 500 reinforced key support levels.

Source: Bloomberg

Monday

  • The Dow Jones gained 1.2%
  • S&P 500 rose +0.89%
  • Nasdaq rose +0.39%.

In fact, it was the best day for the blue-chip-oriented Dow versus the tech-heavy Nasdaq since Silicon Valley Bank collapsed on March 8th. In a sign of cooling volatility, the VIX market “fear gauge” declined 5.25% after at one point rising as much as 13.5%.

A closer look at the CME FedWatch Tool shows that markets continued pricing out odds of a tightening pause from the Federal Reserve this week. Now, the gauge shows about a 75% probability of a 25-basis point rate hike. According to Bloomberg, central banks around the world did not witness a dash for dollars following a joint effort with the Fed to ease access to supplies of the US dollar.

That seems to be an encouraging sign ahead of the hotly anticipated interest rate decision and press conference from Chair Jerome Powell. Key economic event risk is notably lacking during Tuesday’s Asia-Pacific trading session, opening the door for traders to continue enjoying the volatility cooldown. That may allow for near-term strength in indices and the sentiment-linked Australian dollar.

Dow Jones technical analysis

On the daily chart, the Dow Jones was once again unable to pierce through the critical 32017 – 31738 support zone, further reinforcing it. This is as the floor of a falling channel also held. Immediate resistance is the 38.2% Fibonacci retracement level at 32709.

Source: TradingView

S&P 500 technical analysis

The S&P 500 was unable to hold a drop through the 38.2% Fibonacci retracement level at 3938, which seems to be immediate support. For the time being, the index is trading within the boundaries of a near-term falling channel. Immediate resistance is the ceiling on the daily chart below.

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. 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.

Discover how to trade the markets

Learn how indices work – and discover the wide range of markets you can spread bet on – with IG Academy's free ’introducing the financial markets’ course.

Put learning into action

Try out what you’ve learned in this index strategy article risk-free in your demo account.

Ready to trade indices?

Put the lessons in this article to use in a live account – upgrading is quick and easy.

  • Get fixed spreads from 1 point on the FTSE 100
  • Protect your capital with risk management tools
  • Trade more 24-hour markets than any other provider

Inspired to trade?

Put your new knowledge into practice. Log in to your account now.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.