The Dow Jones Industrial Average, S&P 500 and the NASDAQ Composite indices witnessed a mild correction last week. The bounce on Friday aided them to recover some of the loss. The benchmark indices were down in the range of 0.15-0.65 per cent for the week.
On the forex front, the dollar index and the US Treasury yields rose last week.
Here is an analysis on how the US markets can perform this week:
Dow Jones (46,247.29)
The Dow Jones rose to 46,700 as expected before falling back last week. The index has bounced back from its support level of 45,800. If this bounce sustains, a rise to 46,800 is possible this week.
A decisive break above 46,800 is needed to keep the uptrend going. Failure to rise past 46,800 will increase the chances of a corrective fall to 45,500-45,000 in the coming weeks. A break below 45,800 can trigger this fall.
S&P 500 (6,643.71)
The 6,600-6,500 support is holding well. The S&P 500 index has risen back well from the low of 6,569. The trend is up. There is room to test 6,780-6,800 in the short term.
As mentioned last week, 6,800 is a crucial resistance. Failure to breach it can trigger a corrective fall to 6,600-6,500. As such, be more cautious rather than becoming overly bullish as the S&P 500 index goes towards 6,800.
NASDAQ Composite (22,484.07)
The NASDAQ Composite index tested 22,800 and has come down from there. If the bounce towards the end of last week sustains, a rise to 22,900-23,000 can be seen. The upside can be capped at 23,000 for now. A corrective fall to 22,000-21,500 can be seen first before a fresh leg of rally begins.
In case the index manages to breach 23,000 now, an extended rise to 23,600 can happen first. Thereafter the aforementioned corrective fall can be seen.
Dollar outlook
The dollar index (98.15) has risen and closed just above the key level of 98. That keeps our short-term bullish view intact. Immediate support is at 98. Below that, 97.70-97.60 is the next important support zone.
As long as the index stays above these supports, a rise to 99 and even 100 is possible in the short term.
Broadly, 96-100 is the trading range for some time now and the dollar index is moving up within it.
From a long-term perspective, 96 is a very strong support which is holding well for now. So, the consolidation that is happening now between 96 and 100 can be a base formation. This could result in a fresh long-term rally in the dollar index. We will have to wait and watch.
Treasury Yield
The US 10 Yr (4.17 per cent) sustained above 4.1 per cent as expected. Indeed, the rise to 4.2 per cent also happened last week in line with our expectation. We see high chances for the 10Yr Treasury Yield to breach 4.2 per cent and rise to 4.3 per cent in the short term.
The yield has to decline below 4.1 per cent to come under pressure. Only then a fall to 4 per cent and lower levels will come into the picture.
Data Watch
The US Personal Consumption Expenditure (PCE), the Federal Reserve’s inflation gauge came in line with the market expectation. The US PCE for September rose by 2.88 per cent (year-on-year). This aided the stock markets to recover well on Friday as that keeps the door open for the Fed to cut rates as planned.
For the coming week, the Manufacturing Purchasing Managers’ Index (PMI) data on Wednesday and the jobs data on Friday are important to watch. The unemployment rate in the US has ticked up to 4.3 per cent in August. The Federal Reserve Chairman, Jerome Powell has also raised more concern about the slowdown in the US jobs market in the last meeting. As such, the jobs data this week is going to be very important to watch.
Published on September 27, 2025