Dow Jones, the S&P 500, and Nasdaq ended higher on Friday as soft U.S. data alleviated concerns about rising inflation

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the outdoors, enjoys… read more.
on May 16, 2021
  • Wall Street's three main indexes ended higher on Friday
  • US Retail Sales showed no growth in April
  • For the week, the Dow Jones weakened -1.14%, the S&P 500 -1.39%, and the Nasdaq -2.34%

Wall Street’s three main indexes ended higher on Friday as dismal U.S. data cooled tightening expectations and put the U.S. dollar under selling pressure. U.S. Retail Sales showed no growth in April, while the preliminary estimate of the Michigan Consumer Sentiment Index resulted in 82.8 in May (88.3 was in April).

The report boosted demand for high-yielding assets and confirmed the U.S. Federal Reserve’s stance of maintaining an ultra-loose monetary policy for the upcoming period. Despite this, the Dow Jones, the S&P 500, and the Nasdaq weakened on a weekly basis as investors have started to behave nervously amid concerns about the rising inflation.

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The U.S. reported last week that consumer prices rose sharply in April and drove the rate of inflation to the highest level in nearly 13 years. The U.S. Treasury Secretary Janet Yellen said that the FED might need to hike the interest rate soon, inflation has risen sharply, and it’s going to stay high for a while.

“This week, given the big swings, is more evidence of a trader’s environment than a long-term investor’s environment. Inflation continues to be the biggest concern, but the market is looking for its next sustained impulse to the upside,” said Chuck Carlson, senior vice president at Wealthspire Advisors.

The U.S. policymakers said they would focus on ensuring that the labor market makes a full recovery despite inflation worries. Dow Jones, the S&P 500, and Nasdaq remain in a bull market; still, Wall Street’s three main indexes’ upside potential remains limited for now.

S&P 500 down -1.39% on a weekly basis

For the week, S&P 500 SPX weakened by -1.39% and closed at 4,173 points.

Data source: tradingview.com

If the price falls below 4,000 points, it would be a strong “sell” signal, and we have the open way to 3,900 or even 3,800 points. The upside potential remains limited for now, but if the price jumps above 4,300 points, it would be a bullish confirmation for this index, and the next target could be around 4,400 points.

DJIA down -1.14% on a weekly basis

The Dow Jones Industrial Average DJIA weakened -1.14% for the week and closed at 34,382 points.

Data source: tradingview.com

If the price jumps above 34,500 points, it would be a bullish confirmation for Dow Jones Industrial Average (DJIA). On the other side, if the price falls below 34,000 points, it would be a firm “sell” signal, and the next target could be around 33,500 points.

Nasdaq Composite down -2.34% on a weekly basis

The Nasdaq Composite (COMP) has lost -2.34% on a weekly basis and closed at 13,429 points.

Data source: tradingview.com

This index remains under pressure, and if the price falls below 13,000 points, it would be a strong “sell” signal, and the next target could be 12,500 points.

Summary

Wall Street’s three main indexes ended higher on Friday as dismal U.S. data cooled tightening expectations and put the U.S. dollar under selling pressure. The report boosted demand for high-yielding assets; still, the Dow Jones, the S&P 500, and the Nasdaq weakened on a weekly basis.

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