Dow Jones, the S&P 500, and Nasdaq price forecast ahead of the retail sales report

Wall Street’s three main indexes ended sharply higher on Friday as mega-cap tech stocks, led by Apple and Microsoft, advanced more than one percent.

Strong corporate earnings keep the market in a positive mood for now, and results from many big companies provided a strong start to the last quarter of 2021 year.

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For now, 459 companies from the S&P 500 reported their earnings, and it is important to say that 80% delivered consensus-beating earnings.

Despite this, the Dow Jones, the S&P 500, and the Nasdaq weakened on a weekly basis as the rising inflation, together with the world’s supply chains crisis, became a concern for investors.

The U.S. Federal Reserve announced the tapering of its $120 billion in monthly bond purchases by $15 billion per month, and some investors believe a startling rise in consumer prices may accelerate the speed of raising interest rates.

The negative news is that the University of Michigan’s preliminary consumer sentiment data for November dropped to a 10-year low which could be worrisome to retailers as the holiday shopping season draws near. David Carter, chief investment officer at Lenox Wealth Advisors in New York, added:

Markets drifted higher on Friday despite a very weak consumer sentiment report, as inflation seems to be hurting consumers more than corporate profits. The souring mood of the consumer could be worrisome to retailers as the holiday shopping season draws near and is likely to draw intensified scrutiny to upcoming retail earnings reports.

Next week, Walmart, Home Depot, Target, and Macy’s are among the high-profile retailers scheduled to report quarterly results. Investors will watch carefully guidance from these companies to determine if inflation will crimp profit margins or if costs can be passed through.

The U.S. Consumer Price Index hit a 31-year high of 6.2% YoY in October, but according to Fed Chair Jerome Powell, high inflation should be transitory.

The upcoming week will be busy; the U.S. will publish the monthly retail sales report, and investors will continue to pay attention to the Federal Reserve commentaries looking for any clues.

S&P 500 down -0.31% on a weekly basis

For the week, S&P 500 (SPX ) weakened by -0.31% and closed at 4,682 points.

If the price falls below 4,500 points, it would be a strong “sell” signal, and we have the open way to 4,300 or even 4,200 points.

The upside potential remains limited for the week ahead, but if the price jumps above 4,700 points, the next target could be around 4,750 points.

DJIA down -0.63% on a weekly basis

The Dow Jones Industrial Average (DJIA) weakened -0.63% for the week and closed at 36,100 points.

Dow Jones weakened from its record highs, and if the price falls below 35,000 points, it would be a strong “sell” signal. The current resistance level stands around 37,000 points, and if the price jumps above this level, the next target could be around 37,200 points.

Nasdaq Composite down -0.69% on a weekly basis

Nasdaq Composite (COMP) has lost -0.69% on a weekly basis and closed at 15,860 points.

The current support level stands around 15,500 points, and if the price falls below this level, it would be a “sell” signal, and we have the open way to 15,000 points.

Summary

Wall Street’s three main indexes ended higher on Friday but weakened on a weekly basis as the rising inflation, together with the world’s supply chains crisis, became a concern for investors. The U.S. Consumer Price Index hit a 31-year high of 6.2% YoY in October, and some investors believe a startling rise in consumer prices may accelerate the speed of raising interest rates.

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