Dow Jones, the S&P 500, and Nasdaq price forecast after weak U.S. job report

The Dow Jones, the S&P 500, and the Nasdaq weakened on a weekly basis as investors still face uncertainty about how contagious the new Omicron coronavirus is and how well current vaccines work against it.

The World Health Organization (WHO) announced on Friday that the Omicron coronavirus had been detected in 38 countries, and it is unknown at this point would it initiate new lockdowns around the world.

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The U.S. released the Nonfarm Payrolls report on Friday, which showed that the country added only 210K jobs in November.

The job report missed economists’ estimate of 550K in November, while average hourly earnings increased by 0.3% after a 0.4% gain in October. Pantheon Macroeconomics Chief Economist Ian Shepherdson said:

Overall, while this report is disappointing, it does not change our view that faster tapering will be announced in December unless the scientific news on the omicron variant over the next couple of weeks is disastrous.

The positive news is that the unemployment rate fell to 4.2% from 4.6% in October, and the pace of recovery is likely sufficient to prompt the U.S. Federal Reserve to accelerate the taper of asset purchase.

According to Fed Chair Jerome Powell, the U.S. central bank will consider a faster wind-down of its bond-buying program, which also raises speculations ​that interest rate hikes would also be brought forward.

Jerome Powell also said that inflation had spread more than previously expected and that the risk of persistent inflation has risen.

Monetary tightening is usually seen as a drag on stocks, but the focus of investors will turn now on the release of the consumer price index and core inflation readings next Friday.

S&P 500 down -1.2% on a weekly basis

For the week, S&P 500 (SPX ) weakened by -1.2% and closed at 4,538 points.

The upside potential remains limited for the week ahead, and if the price falls below 4,400 points, it would be a strong “sell” signal.

DJIA down -0.9% on a weekly basis

The Dow Jones Industrial Average (DJIA) weakened -0.9% for the week and closed at 34,580 points.

The current support level stands around 34,000 points, and if the price falls below this level, the next target could be 33,000 points.

On the other side, 35,000 points represent the first resistance level, and if the price jumps above this level, the next target could be around 35,200 points.

Nasdaq Composite down -2.6% on a weekly basis

Nasdaq Composite (COMP) has lost -2.6% on a weekly basis and closed at 15,085 points.

Nasdaq Composite continues to trade above 15,000 points; still, if the price falls below 14,800 points, it would be a strong “sell” signal.

Summary

Wall Street’s three main indexes weakened on a weekly basis as investors still face uncertainty about how contagious the new Omicron coronavirus is and how well current vaccines work against it. The upcoming week will be busy, but inflation readings will be in focus as data are expected Friday on the November consumer price index and core inflation.

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