Top 3 Reasons Behind S&P500 and DJIA Sell-off – Key Levels to Focus

The U.S. stock market indices dipped in the wake of disappointing fundamentals. In this update, we are going to see key reasons behind sell-off and key trading levels to watch this week…

Top 3 Reasons Behind Bearish Trend

1 – U.S.- China Trade Sentiment 

First of all, investors seem worried about a lack of development in the U.S. and China trade talks. Both of the economies are still “very far apart” on resolving trade disputes. The uncertainty among investors is leading them to look for less risky investments.

2 – Disappointing U.S. Retail Sales 

The U.S. retail sales rose at a moderate pace of 0.3% in April, compared with a forecast of 0.5% and 0.4% surge in March. Logically, drop in sales lead to drop in earnings and profits. So, ultimately, companies may pay fewer dividends to shareholders. Would you invest in stocks for fewer dividends? That’s it, the investors seem to move on to other investments.

3 – 10 Year Bond Yields 

Most of the bearish trend initiated after the benchmark 10-year Treasury yield crossed above 3% after completing 38.2% retracement. Since government bonds are safe investments and for the moment these are paying off higher premium, the traders are switching from their investments in stocks to bonds.

S&P500- SPX- Trading Levels

Support     Resistance 

2726.22       2738.92

2722.29       2742.85

2715.94        2749.2

Key Trading Level:    2732.57

DJIA- Dow30 – Trading Levels

Support     Resistance

24868.41      24969.01

24837.34      25000.08

24787.04      25050.38

Key Trading Level:    24918.71

Investors are advised to monitor the U.S. Industrial Production m/m and Capacity Utilization Rate figures. The positive data can support the sinking equities today. Good luck!

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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