US indices ended in negative territory on Wednesday following the Fed’s decision to cut its benchmark rate by 25 basis points. While the Fed delivered the widely expected rate cut, Fed Chairman Powell’s comments at the press conference revealed an indefinite stance on future monetary policy thereby prompting a selloff in US equities as market participants that expected a firm dovish guidance were disappointed. Today the US publishes initial jobless claims and ISM manufacturing PMI for July. The manufacturing sector has been a point of economic weakness for the US so the related data will be in focus as it is estimated to show improvement. Moreover, we can expect corporate earnings to impact price action while market participants digest yesterday’s monetary policy outlook and decide whether the bearish development should extend.
The Dow index sunk be over 500 points before ending 1.23% lower at 26864 on Wednesday. The index recorded an intra-day low of 26686 which has now become a newly found area of support ahead of the 50-day MA at 26490. Yesterday’s bearish reaction may be today’s correction if we see price hold above the 26885 level to target the 27000 level. Failure to do so, should maintain selling pressure and lead price to range before it re-tests the support at 26680.
Resistance: 26890/ 27000