US stock index futures continued to slide down on Wednesday after US markets failed to resume the bullish rally on Tuesday. Dow Jones futures decreased by 17 points or about 0.1%, while S&P 500 and Nasdaq 100 futures lost 0.2%.
Today, investors are focused on the upcoming speech by Fed chairman Jerome Powell at the ECB Forum on Central Banking. Powell's speech is unlikely to have any new information. However, renewed statements about fighting inflationary pressure could signal investors about their weak position and when could they test the bottom.
Yesterday, the Dow Jones fell by 1.5%, while the S&P 500 and the Nasdaq Composite lost 2% and 3% respectively. Stocks fell amid slumping demand for risky assets following disappointing consumer confidence data. The second quarter of 2022 ends tomorrow, and investors could rebalance their portfolios during the current bull market due to growing recession fears. Few market players currently buy risky assets, as they do not believe that equities have bottomed out.
Currently, the sell-off is not a disorganized rout, and the Federal Reserve is not concerned about stock prices. There is speculation that the Fed would not put a hold on its efforts to bring inflation under control via interest rate hikes unless there is real panic in the market.
Shares of Wynn Resort and Las Vegas Sands went up in the premarket after China eased quarantine restrictions. Pinterest advanced by 3% following reports that the social media's CEO Ben Silbermann has stepped down.
According to the latest US mortgage data released by the Mortgage Bankers Association, demand has stalled amid overheating in the real estate market. Mortgage rates dipped slightly last week after rising for three straight weeks, prompting a small increase in refinance activity. However, total mortgage demand has remained flat compared to the previous week due to low buying activity. The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.84% from 5.98%, while applications to refinance a home loan rose 2%, MBA said. "Overall purchase activity has weakened in recent months due to the quick jump in mortgage rates, high home prices, and growing economic uncertainty," Joel Kan, an MBA economist noted.
On the technical side, the S&P 500 quickly ended its bullish rally yesterday. The main goal for bullish traders is breaking through the resistance at $3,826. A breakout above this level would push the index up towards $3,867, where bearish traders would come into play. Some traders could likely take profits and close their long positions at this level as well. If pessimism in the market prevails amid renewed speculation about fighting high inflation, the instrument could fall towards the closest support at $3,788 and $3,762. A breakout below this level could lead to a sell-off at $3,730 and $3,704.
