Dow Jones, S&P 500, and Nasdaq weakened as uncertainty dented confidence

Written by: Stanko Iliev
February 28, 2021
  • For the week, the Dow Jones weakened -1.78%, the S&P 500 -2.45%, and the Nasdaq -4.92%
  • Wall Street analysts expect an equity pullback in March
  • Rising treasury yields continue to spook investors

The U.S. stock market weakened in the last trading week of February, and Wall Street’s three main indexes closed in the red. Rising treasury yields continue to spook investors, and it is important to say that the U.S. 10-year Treasury yield hit a one-year high and rose above the S&P 500 dividend yield.

The Dow Jones, the S&P 500, and the Nasdaq face a tough road ahead as higher lending rates make speculative equities less attractive, and March may bring more pain for stock market investors. Many analysts also warn of an ‘epic’ bubble amid fears that stimulus flow has created extreme overvaluation while disappointing economic data continue to be dismissed.

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“The frenzy is fed by people getting commissions and other revenues out of this new bunch of gamblers, and, of course, when things get extreme, you have things like that short squeeze … and it’s really stupid to have a culture which encourages so much gambling in stocks by people who have the mindset of racetrack bettors and, of course, it will create trouble, as it did,” said Charlie Munger, Warren Buffett’s longtime business partner and vice chairman of Berkshire Hathaway.

The U.S. stock market has already priced in a $1.9 trillion stimulus package, and the upside potential for Wall Street’s three main indexes remains limited for now.

S&P 500 down -2.54% on a weekly basis

For the week, S&P 500 (SPX) weakened by 2.45% and closed at 3,811 points.

Data source: tradingview.com

As long the price is above this trend line, the S&P 500 index remains in a bull market, and there is no indication of the trend reversal. If the price jumps above 4,000 points, it would be a “buy “signal for the S&P 500, and the next target could be around 4,100 points.

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DJIA down -1.78% on a weekly basis

The Dow Jones Industrial Average (DJIA) weakened -1.78% for the week and closed at 30,932 points. Wall Street analysts expect an equity pullback in the near-term, but as long the price is above 30,000 points, the Dow Jones Industrial Average index remains in a bull market.

Data source: tradingview.com

If the price jumps above 31,000 points, it would be a bullish confirmation for Dow Jones Industrial Average (DJIA), but if the price falls below 30,000 points, it would be a firm “sell” signal.

Nasdaq Composite down -4.92% on a weekly basis

 The Nasdaq Composite (COMP) has lost 4.92% on a weekly basis and closed at 13,192 points.

Data source: tradingview.com

If the price jumps again above 14,000 points, it would be a confirmation of the bullish trend, but if the price falls below 13,000 points, it would be a strong “sell” signal, and we have the open way to 12,500 points.

Summary

The U.S. stock market weakened in the last trading week of February, and Wall Street’s three main indexes closed in the red. The U.S. 10-year Treasury yield hit a one-year high and rose above the S&P 500 dividend yield and according to analysts, March may bring more pain for stock market investors.