- Crude oil sell-off continues to weigh on energy shares.
- Trade conflict headlines keep industrials in the positive territory.
After staging a modest rebound in the first couple of hours following the opening bell, major equity indexes in the U.S. failed to preserve their bullish momentum as the ongoing selling pressure seen on crude oil prices weighed on energy shares to offset potential gains.
Earlier in the day, Larry Kudlow, White House economic adviser and the director of the National Economic Council, told CNBC that the U.S. and Chine were talking on trade again and added that the U.S. was in ‘very good trade negotiations’ with the EU and Japan. Boosted by these remarks, the trade-sensitive S&P 500 Industrials Index gained traction and finished the day 0.45% higher. Commenting on this development, “Trade is still an open question. It’s still a work in progress. It will continue to dog the markets short term until it gets worked out,” Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama, told Reuters.
On the other hand, following an unimpressive recovery attempt in the first half of the day, crude oil prices came under a renewed selling pressure and the barrel of West Texas Intermediate fell to its lowest level in a year at $54.75. The WTI was last seen at $55.25 in the post-settlement rade, losing 6.15% on the day while the S&P 500 Energy Index lost 2.4% to become the worst performing major sector of Tuesday.
The Dow Jones Industrial Average lost 100.69 points, or 0.4%, to 25,286.49, the S&P 500 erased 4.04 points, or 0.15%, to 2,722.18 and the Nasdaq Composite was virtually unchanged on the day at 7,200.88.
DJIA technical outlook by FXStreet Chief Analyst Valeria Bednarik
The DJIA closes in the red for a third consecutive day, with lower lows and lower highs keeping the risk skewed to the downside. The index settled a handful of points below a mild-bearish 20 DMA, not far above the 200 DMA a big psychological barrier at 25,150, as once below it, the decline will likely accelerate. Technical indicators in the daily chart have retreated sharply from overbought readings, with the Momentum pressuring its mid-line and the RSI currently at 45, in line with another leg lower ahead.
In the shorter term, and according to the 4 hours chart, the index is also bearish, as it finished the day below its 20 and 200 SMA, while still stuck to a flat 100 DMA, as technical indicators consolidate at monthly lows near oversold readings.
Support levels: 25,306 – 25,248 – 25,190.
Resistance levels: 25,349 – 25,400 – 24,461.
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