Dow sheds 500 points, stocks finish lower on worries of further Fed rate hikes

Stocks fell Monday on fears that the Federal Reserve may continue tightening until it tips the economy into a recession.

The Dow Jones Industrial Average fell 482.78 points, or 1.4%, to finish at 33,947.10.

Macao-linked casino stocks gained on hopes of easing Covid-19 restrictions, while VF Corp. shares slid 11.2% after the apparel company cut its outlook.

A hotter-than-expected reading of November ISM Services further fuelled concerns that the Fed will continue hiking after the index topped Dow Jones’ estimates and increased from October.

Bond yields pushed higher as equities fell, with the yield on the benchmark 10-year Treasury last trading up 9 basis points at 3.588% late Monday.

“Clearly, equity markets want to move higher, but that’s very dependent on inflation getting under control,” said Peter Essels, senior vice president of investment management and research at Commonwealth Financial Network. “And so, when you have above expectation prints on any econ number that comes out, that tends to fuel inflationary concerns, which sends rates higher.”

Following a speech last week by Fed Chairman Jerome Powell, markets expect the central bank will approve a 0.5 percentage point interest rate increase. That would mark a step down from a series of four straight 0.75 percentage point hikes.

DOW JONES TECHNICAL ANALYSIS

DAILY CHART:

In daily chart Dow Jones is currently trading in up channel.

Dow Jones is currently trading above 20 & 50 SMA

RSI is in buying zone which suggests bullishness and Stochastic is suggesting down trend.

Dow Jones immediate resistance is at 34077 & its immediate support level is at 33947

HOW TO TRADE DOW JONES INDEX IN THIS WEEK

Dow Jones is moving in up channel; it will remain in up channel until any trend reversal. So, remain bullish on it.

TRADE SUGGESTION-BUY AT 34077, TARGET AT 34409, SL AT 33866