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.
- 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.
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.
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.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
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. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Explore the markets with our free course
Discover the range of markets you can spread bet on - and learn how they work - with IG Academy's online course.
Turn knowledge into success
Practice makes perfect. Take what you’ve learned in this index strategy article, and try it out 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 simple.
- Get fixed spreads from 1 point on FTSE 100 and Germany 40
- Protect your capital with risk management tools
- Trade more 24-hour markets than any other provider – 26 in total
Inspired to trade?
Put the knowledge you’ve gained from this article into practice. Log in to your account now.
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.