Wall Street’s three main indexes ended sharply lower on Friday as investors have started to behave nervously amid concerns around tax hikes and possible shifts in the U.S. Federal Reserve’s timeline for tapering asset purchases. Democrats want to raise the tax rate on corporations to 26.5% from the current 21%, and a potential increase in corporate taxes would also negatively influence stock markets.
The battle against the coronavirus is still not over, and investors are also concerned that the Delta variant of the coronavirus could slow the U.S. economy. Another negative news is that some Fed officials warned it is nearly time for the central bank to begin pulling back on its monetary support, including the tapering of its asset purchases.
“The market is struggling with prospects for tighter fiscal policy due to tax increases and tighter monetary policy due to Fed tapering. Inflation is likely to be a major issue next week when the Federal Open Markets Committee holds its two-day monetary policy meeting,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.
Several Fed officials expect hikes sooner than previously anticipated because inflation accelerated above acceptable levels, and investors will continue to pay attention to the bank’s commentary looking for any clues. The Dow Jones, the S&P 500, and the Nasdaq weakened on a weekly basis, and the risk aversion will probably continue in the upcoming weeks.S&P 500 weakened by -0.91% on Friday
S&P 500 SPX weakened by -0.91% on Friday and closed the week at 4,432 points.Data source: tradingview.com
If the price falls below 4,300 points, it would be a firm “sell” signal, and we have the open way to 4,200 or even 4,000 points. The upside potential remains limited for the week ahead, but if the price jumps above 4,500 points, the next target could be around 4,600 points.DJIA weakened by -0.48% on Friday
The Dow Jones Industrial Average DJIA weakened by -0.48% on Friday and closed the week at 34,584 points.Data source: tradingview.com
Dow Jones weakened from its recent highs, and if the price falls below the strong support level that stands at 34,000 points, it would be a firm “sell” signal. The current resistance level stands around 35,000 points, and if the price jumps above this level, the next target could be around 35,200 points.Nasdaq Composite weakened by -0.91% on Friday
The Nasdaq Composite (COMP) weakened by -0.91% on Friday and closed the week at 15,043 points.Data source: tradingview.com
The current support level stands around 15,000 points, and if the price falls below this level, it would be a “sell” signal, and we have the open way to 14,800 points.Summary
Dow Jones, the S&P 500, and Nasdaq weakened last week amid concerns around tax hikes and possible shifts in the U.S. Federal Reserve’s politics. The upside potential remains limited for the week ahead, and the risk aversion will probably continue in the upcoming weeks.