- Summary:
- Dow Jones has plunged fear as investors flee from riskier stocks. The fear & greed index is signaling fear among investors.
Dow Jones has fallen further by 1.99% as the market reacts to the US consumer-price inflation numbers. April’s CPI came in at 08% MoM, which is the highest since 2009. Even with the removal of food and energy from the equation, core CPI rose by 0.9% MoM. The numbers largely surpassed the economists’ estimates. S&P 500 and Nasdaq also dropped by 2.15% and 2.67% respectively. The focus is now on Thursday’s US PPI and Friday’s US retail sales data.
At the same time, the fear & greed index is at 37 on the fear side of the spectrum. This is a decline from the previous session’s neutral of 49. It is also lower than the neutral level of 54 a month ago. However, junk bond demand and stock price strength still signal investors’ extreme greed. On the other hand, safe-haven demand, market volatility, and the put and call options are indicating extreme fear in the market. Notably, investors are choosing bonds over riskier stocks. Â
Technical Outlook
Dow Jones extended the week’s losses as a reaction to the ongoing inflationary pressures. On Wednesday, the index closed at 33,587.7 points, down by 1.99%. Since the beginning of the week, it has plunged by about 4.25%. On an hourly chart, it is trading below the 14 and 28-day exponential moving averages.
Dow Jones closed Wednesday’s session at the resistance-turn-support level of 33,600. I expect it to seesaw around that level while the bulls gather enough momentum to push it to 34,000 points. On the flip side, higher-than-expected US PPI numbers may cause the index to fall further to 33,200 points.
Dow Jones Chart
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