Stock market on December 16: S&P 500 and NASDAQ extend weakness

[Ben Graham]

Yesterday, stock indices closed lower once again. The S&P 500 fell by 0.16%, while the Nasdaq 100 decreased by 0.59%. The Dow Jones Industrial Average slid by 0.09%.

The US stock market declined as investors reduced risk ahead of the release of key economic data expected to prodive insights into potential future changes in interest rates. Asian indices dropped by 1.5%, as did futures on the S&P 500 index, with traders refraining from taking further action ahead of US jobs data for October and November, expected to indicate weakness in the labor market. The upcoming publication is anticipated to be a defining factor for market sentiment. Weaker-than-expected figures are likely to heighten expectations for further monetary policy easing.

Chinese stocks plummeted to key technical levels as slowing growth in the tech sector and renewed concerns about the country's economic growth fueled a sharp sell-off. European indices are also preparing for a weak opening.

Bitcoin crashed to around $85,000. Oil remains near its lowest level since 2021, and gold declined after five days of gains.

Maybank Securities noted that they were observing a clear trend toward reducing risk. They also mentioned concerns regarding asset valuations, adding that with important macroeconomic statistics, such as jobs data, some funds seemed to be reducing their beta or locking in profits.

The Asian currency markets were also in focus. The yen strengthened against the dollar, falling below 155 ahead of the widely anticipated decision by the Bank of Japan on Friday to raise the key interest rate to its highest level in three decades. The Indian rupee fell to record low levels, with an increasing number of officials advocating for a stronger yuan to help stabilize the Chinese economy.

The yield on 10-year Treasury bonds stabilized around 4.17% after a slight decline on Monday amid speculation that the Fed will cut rates twice next year to support the labor market, despite signs of persistent inflation.

Regarding the technical picture of the S&P 500, the main task for buyers today will be to overcome the nearest resistance level of $6,784. This will help the index gain ground and pave the way for a potential rally to a new level of $6,801. Another priority for bulls will be to maintain control over $6,819, which would strengthen buyers' positions. In the event of a downward movement amid reduced risk appetite, buyers must assert themselves around $6,769. A break below that level would quickly drive the trading instrument back to $6,756 and open the path to $6,743.

The material has been provided by InstaForex Company - www.instaforex.com