Technical bounce back expected

Last week both the S&P 500 and the Nasdaq breached key levels, resulting in a losing week for U.S. stocks. A technical respite seems on card for the S&P 500 index at its 200-day moving average approximating at 4232.

Rising Interest Rates and Strong U.S. Dollar

The stock market decline came in the wake of the 10-year Treasury yield topping 5% for the first time since 2007. Rising interest rates and a robust U.S. dollar have posed significant headwinds for stocks. The relentless climb in Treasury yields, which reached 5% is expected to cool off this week.

The market’s focus now lies in how long 5% interest rates or higher will persist and what impact this might have on the broader economy. The Fed is taking a cautious approach, with the likelihood that they will maintain their current rate range at the upcoming meeting.

Bitcoin consolidates

Bitcoin opened this week around $30,000 as trading volumes picked up. Market sentiment oscillates between the potential approval of a Bitcoin exchange-traded fund (ETF) in the U.S., and the U.S. Federal Reserve’s intent to maintain “higher-for-longer” interest rates. Resurgent discussions about cryptocurrencies as potential safe havens during crises could drive Bitcoin prices towards $33,000. Currently Bitcoin trades close to $30,000.

Gold in demand

Spot gold opened soft at $1967. The conflict between Israel and Hamas in the Middle East has been one of the catalysts driving up gold prices towards $2,000 and above. The ‘yield curve’ may be interpreted as a signal of an impending recession leading to a frenzied gold buying as gold is seen as a safe haven during such a crisis. Traders will watch $2,000 as a key sentimental pivot.

Oil prices firm

WTI crude oil opened with 1% downtick around $88. The Israel-Hamas conflict firmed WTI crude price at $88.3. It remains to be seen in which direction the intensity of the conflict will drive crude oil prices.

Market hopeful

Overall, the market participants are closely watching key important levels for the S&P 500, rising treasury yields, the Israel-Hamas, gold, crypto and oil prices. The trend is clear for S&P 500, the Nasdaq and the Dow, it’s down. However an impending rout is not visible in commodities yet.

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