The Dow Jones Industrial Average, S&P 500 and the NASDAQ Composite indices surged over 1.5 per cent on Friday. The US Federal Reserve Chairman Jerome Powell in his Jackson Hole speech hinted at possible rate cuts going forward. This triggered a sharp rise in the equities. In turn, the dollar index and the Treasury yields were knocked down badly on Friday.
For the week, the Dow Jones rose 1.53 per cent and the S&P 500 was up 0.27 per cent. The NASDAQ Composite index on the other hand was down 0.58 per cent. Will the indices retain their momentum and rise further? Here is an analysis:
Dow Jones (45,631.71)
The Dow Jones has surged breaking above the resistance level of 45,050. The index made a record high of 45,757.84. The expected breakout above 45,050 keeps our overall bullish view intact. The Dow Jones can target 46,500-46,600 in the short term. Thereafter a corrective fall to 45,000 is a possibility. But as long as the Dow stays above 45,000, the broader picture will remain bullish to target 50,000 over the long term.
The Dow has to decline below 45,000 now to turn the short-term outlook bearish.
S&P 500 (6,466.92)
The S&P 500 index has risen back well from the low of 6,343.86 recovering all the losses. The uptrend is intact. Immediate resistance is at 6,480. A break above it can take the S&P 500 index up to 6,580 this week. It will also keep the doors open to test 6,670-6,700 and even 6,800 over the medium term.
Strong support is in the 6,350-6,300 region. The index has to fall below 6,300 to turn the outlook negative. That looks less likely.
NASDAQ Composite (21,496.53)
The support at 21,000 mentioned last week has held very well. The NASDAQ Composite index fell to a low of 20,905.99 and then has risen back well recovering most of the loss. The strong bounce keeps the broader bullish view intact.
Resistance is around 21,800. The index can breach this hurdle and rise to 22,600 and 23,500 over the medium term. From a long-term perspective, the NASDAQ Composite has potential to target 26,000 on the upside in a year or so.
The region between 21,100-20,900 will continue to act as a strong support zone. The NASDAQ Composite index has to fall below 20,900 to become bearish.
Dollar outlook
The dollar index (97.73) has come off sharply from the high of 98.83. This keeps the short-term bias negative. The price action on the weekly chart clearly indicates that the index is getting strong sellers around 99.
The dollar index can fall to 97 from here. A break below 97 can see the downside extending to 96.30-96. This 96.30-96 is a strong long-term support which can limit the downside. As such we can expect the dollar index to reverse higher again from the 96.30-96 support zone and move up towards 98-99 again.
Broadly, 96-101 can be the wide trading range for the dollar index for some time.
Treasury Yield
The US 10Yr Treasury Yield (4.25 per cent) has come down sharply failing to breach the 4.3-4.4 resistance zone. The region between 4.3 per cent and 4.35 per cent will act as a good resistance now. The bias is negative. The US 10Yr Yield can fall to 4.2 per cent initially. A break below 4.2 per cent can then drag it down to 4.1 and even 4 per cent.
Data watch
The US Personal Consumption Expenditure (PCE), the Fed’s inflation gauge, is due for release this week on Friday. A soft PCE number will strengthen the case for the rate cuts. That will boost the risk aversion sentiment in the market. In turn, it will take the US equities further higher, and the dollar index and Treasury yields lower.
Published on August 23, 2025
