Dow futures tumbled 200 points on Monday as 10-year Treasury yields topped 5%.
Stock futures declined on Monday as Treasury yields surged, and traders looked ahead to the release of earnings reports from major tech companies.
The Dow Jones dropped 0.4%.
The yield on the benchmark 10-year Treasury note increased by approximately 9 basis points, surpassing the crucial 5% threshold. Yields for the 2-year note and 30-year bond also rose.
The rapid ascent in yields, noted Canaccord Genuity Group’s chief market strategist Tony Dwyer, could intensify the already weakening economic outlook, albeit masked by higher rates.
The week is set to see an influx of earnings reports, particularly from tech giants such as Alphabet, Amazon, Meta, and Microsoft, which are expected to provide critical insights for the stock market.
In addition to earnings, traders are preparing for the release of significant economic data this week, including the third-quarter advance report for U.S. gross domestic product on Thursday and the release of the personal consumption expenditure, a gauge of inflation, on Friday. Investors are concerned that if these reports surpass expectations, the possibility of another rate hike this year cannot be entirely ruled out.
Dow Jones Technical Analysis Daily Chart:
Technical Overview
Dow Jones is currently trading within a down channel.
Dow Jones is positioned below all Moving Averages (SMA).
The Relative Strength Index (RSI) is in the selling zone, while the Stochastic oscillator suggests a negative trend.
Immediate Resistance level: 33349.74
Immediate support level: 33096.82
How To Trade Dow Jones
Dow Jones witnessed a significant ascent but faced a barrier, resulting in a subsequent decline. Subsequently, it has been trading on a downward trajectory and has developed a head and shoulders pattern. Presently, it is positioned at a critical support level, and a breach of this zone could potentially lead to further downside movement.
TRADE SUGGESTION- STOP SELL – 32908.31, TAKE PROFIT AT- 32386.57, SL AT- 33355.52.