Dow Jones, S&P 500, and Nasdaq weakened on a weekly basis as uncertainty over fresh economic stimulus dented confidence

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Dec 13, 2020
  • For the week, the Dow Jones weakened -0.57%, the S&P 500 -0.96%, and the Nasdaq -0.69%
  • The U.S. surpassed the 16 million coronavirus cases on Saturday
  • The correction of the U.S. stock market could be around the corner

The U.S. stock indices have weakened on a weekly basis as uncertainty over fresh economic stimulus dented confidence. The U.S. surpassed the 16 million coronavirus cases on Saturday, and the U.S. Congress can’t agree on a stimulus deal as regional lockdowns come into place.

The virus is out of control in the country, and regional lockdowns are being applied, making fiscal aid more urgent. For the week, the Dow Jones weakened -0.57%, the S&P 500 -0.96%, and the Nasdaq -0.60% but all three indices remain in a bull market.

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“While the pandemic will likely get worse before it improves, and volatility could arise if any stimulus deal fails to stave off bankruptcies, investors should look to move excess cash into a globally diversified portfolio”,  said Tracie McMillion, Wells Fargo head of global asset allocation strategy.

The positive news is that the Food and Drug Administration has authorized the Pfizer-BioNTech coronavirus vaccine for emergency use in the U.S., which should positively impact the U.S. stock indices at the beginning of this trading week. Any positive news on vaccines and fiscal stimulus will support the U.S. stock indices in the short term, but any bad information on pandemic and lockdowns could crash these three indices.

My opinion is that the current risk/reward ratio is not suitable for long-term investors, and the correction of the U.S. stock market could be around the corner.

S&P 500 down 0.96% on a weekly basis

For the week, S&P 500 (SPX) booked a 0.96% decrease and closed at 3,663 points.

Data source: tradingview.com

The trend line on the chart above represents a firm support level, if the price breaks this trend line it would be a strong “sell” signal, and we have an open way to 3,400 points ( this is also a strong support level). As long the price is above this trend line and 3,400 points, the S&P 500 index remains in the “buy” zone, and there is no indication of the trend reversal.

DJIA down 0.57% on a weekly basis

For the week, the Dow Jones Industrial Average (DJIA) weakened 0.57% and closed at 30,046 points.

Data source: tradingview.com

The Dow Jones Industrial Average snapped two-week winning streaks, but as long the DJIA is above 28,000 points, this index remains in a bull market. Walt Disney shares were the biggest boost to the Dow and S&P 500, surging 13.59% last Friday, and this is one of the reasons why this index closed above 30,000 points.

Nasdaq Composite down 0.69% on a weekly basis

 The Nasdaq Composite (COMP) weakened 0.69% on a weekly basis and closed at 12,377 points.

Data source: tradingview.com

Nasdaq broke a three-week streak of gains, but as long the price is above this trend line and 11,000 points, this index remains in the bull market. If the price jumps above 12,800 points, it would be a signal to buy the Nasdaq Composite (COMP), and we have the open way to 13,000 points.

Summary

The U.S. stock indices have weakened on a weekly basis as uncertainty over fresh economic stimulus dented confidence. For the week, the Dow Jones weakened -0.57%, the S&P 500 -0.96%, and the Nasdaq -0.60%, but all three indices remain in a bull market.

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