On Monday, the US stock market made a 180-degree turn, intensifying the previous sell-off and causing the market to set a record for the longest consecutive weekly decline since 2022. This came as more US troops arrived in Iran, raising concerns that the conflict might escalate.
The S&P 500 index dropped 0.4%, erasing a 0.9% gain in the morning session. The benchmark index closed at its lowest level since August and is now less than 1% away from entering a correction. The Nasdaq 100 index fell 0.8%, after the index entered a correction last Friday.
The White House has threatened to escalate attacks on Iran further, including destroying key civilian energy infrastructure. Despite President Trump’s claim that negotiations are making progress, there are no signs of any easing of the war. He posted on social media threatening to destroy Iran’s energy assets if the Strait of Hormuz is not reopened soon.
Investors also evaluated the contradictory messages conveyed by Federal Reserve Chair Jerome Powell. The Fed chair stated that the Fed would achieve the 2% inflation target, but at the same time pointed out that the Fed was almost powerless against supply shocks, such as the recent energy price surge caused by the unrest in the Middle East.
U.S. Treasuries rose as traders grew concerned about economic growth and gave up bets on the Federal Reserve raising interest rates. Meanwhile, U.S. crude oil prices closed above $100 a barrel for the first time since 2022. Energy stocks have risen for 14 consecutive weeks, setting a record for the longest streak of gains in history.
However, Mike Wilson of Morgan Stanley said that more and more evidence indicates that the decline in the stock market over the past five weeks “is coming to an end”, suggesting that investors have digested growth risks to a greater extent than the market generally expected.
Meanwhile, the trading department of Goldman Sachs Group said that hedge funds have begun to show signs of capitulation and systematic investment institutions have also run out of steam. The department predicted that in the coming month, regardless of market conditions, commodity trading advisors (CTAs) will be buyers.
The S&P 500 is on track for its worst monthly performance since 2022, while the Nasdaq 100 has dropped 12% from its October record high; last Friday, the index fell below the threshold for a technical correction. The trigger for this sharp decline was market concerns that the war in the Middle East could cause oil prices to soar, potentially stifling economic growth and reigniting inflation.
JPMorgan strategists pointed out that the current situation is significantly different from that of 2022. In 2022, Russia’s invasion of Ukraine and the COVID-19 pandemic pushed inflation to its highest level in 40 years. They said that unlike then, central bank policy rates are now high, wage data is trending downward, and artificial intelligence makes deflation more likely than stagflation.
“Regarding the stock price trend, although the market has not factored in an economic recession, this does not mean that complacency is widespread in the market,” wrote the team led by Mislav Matejka.
Technical analysis:
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Gold: Yesterday, we clearly stated in the plugin that after breaking through 4545, we should buy limit when the price retraces to the blue area. Currently, the overnight price movement perfectly aligns with our expectations. Today, the price has broken through the key resistance level around 4550. However, due to the taco factor, we still need the price to retrace and confirm the validity of 4550 before we can capture the long signal again at this level. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: Yesterday, we provided a buy stop operation suggestion for the blue area breakthrough in our plugin, and the effect was also very significant, achieving a profit-to-loss ratio of more than 3 times. Today, pay attention to the effect of the price rebounding against the support at 23,050. If it stabilizes, you can try a long position once. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The price increase will still trigger the taco behavior. We will continue to monitor the new short signals after the upward liquidity sweep. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key financial data and events to focus on:
14:45 French March Consumer Price Index
15:55 Germany’s seasonally adjusted unemployment rate for March
17:00 Eurozone March consumer price index preliminary value
22:00 U.S. JOLTs Job Openings for February (in thousands)
22:00 US Conference Board Consumer Confidence Index for March
