Dow Jones, the S&P 500, and Nasdaq price forecast after positive U.S. job report

Wall Street’s three main indexes weakened last week even though the U.S. job market confirmed that the economy is on solid footing, but the prospect of more Fed rate hikes continues to keep investors in a negative mood.

The U.S. released the Nonfarm Payrolls report on Friday, which showed that the country added 428,000 jobs in April. The job report surpassed economists’ estimate of  391,000 for April and underscored the economy’s strong fundamentals despite a contraction in the gross domestic product in the first quarter.

The unemployment rate remained unchanged at 3.6%, while average hourly earnings increased 0.3% against a 0.4% rise forecast. Ryan Detrick, chief market strategist for LPL Financial said:

The solid jobs number today confirms the economy is on solid footing. Earnings have been strong, the employment backdrop is strong, but the uncertainty over 40-year-high inflation and a hawkish Fed is still what investors are faced with for the remainder of this year.

As widely expected, the U.S. Federal Reserve raised the interest rate by 50 bps on Wednesday and announced that it would start reducing the balance sheet on June 1.

Federal Reserve Chair Jerome Powell also said that he would support a 50-basis-point interest rate increase in June and July, which confirms that the Federal Reserve would need to be more aggressive than expected in raising interest rates to combat inflation.

On the other side, Russia’s attack on Ukraine remains in focus, and part of the indexes’ losses can be attributed to the war between Russia and Ukraine. Ukrainian President Volodymyr Zelenskiy said that the international community should take seriously the threat that Russia could use nuclear weapons in Ukraine.

S&P 500 down -0.21% on a weekly basis

For the week, S&P 500 (SPX ) weakened by -0.21% and closed at 4,123 points.

Data source: tradingview.com

The upside potential remains limited for the week ahead, and if the price falls below 4,000 points, it would be a strong “sell” signal.

DJIA down -0.24% on a weekly basis

The Dow Jones Industrial Average (DJIA) weakened by -0.24% for the week and closed at 32,899 points.

Data source: tradingview.com

The strong support level stands at 32,000 points, and if the price falls below this level, the next target could be 31,500 points. If the price jumps above 33,500 points, the next target could be resistance at 34,000 points.

Nasdaq Composite down -1.54% on a weekly basis

Nasdaq Composite (COMP) has lost -1.54% on a weekly basis and closed at 12,144 points.

Data source: tradingview.com

The important support level stands at 12,000 points, and if the price falls below this level, it could be the beginning of a much stronger sell-off.

Summary

The Dow Jones, the S&P 500, and the Nasdaq ended lower last week even though the U.S. job market confirmed that the economy is on solid footing. The U.S. added 428,000 jobs in April, but the prospect of more Fed rate hikes continues to keep investors in a negative mood.

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