U.S. equities closed lower on Tuesday as large-cap technology stocks fell more than 1 percent, while a Senate vote delay raised heighten policy uncertainty.
The Dow Jones industrial average pulled back about 100 points, with 3M and Apple leading decliners. The 30-stock index fell after multiple reports said the Senate will hold off on voting on a bill to repeal and replace Obamacare until after the July 4 recess. President Donald Trump has said repeatedly he wants to repeal and replace Obamacare before moving on to other items on his agenda, including tax reform. What’s more, rumours are circulating that some Republicans could oppose to the long-awaited corporate tax cut, which would undermine the idea of the tax reform.
Dow Jones fell after reports showed that Trump’s reforms are far from being introduced. The index lost 100 points, but remains well above 21.000 points. source: Bloomberg
Looking at the chart we may notice that Dow Jones remains within a long term upward channel and is still above an important level of support at 21.000 points. If the correction is to continue, a move towards the mentioned level that is also a lower bound of the channel could be an interesting opportunity to join the trend.
Dow Jones remains within the long-term channel. That is why a move towards a support at 21.000 points could be a decent opportunity to join the upward trend.
The Nasdaq composite underperformed, falling 1.6 percent, as shares of Google-parent Alphabet declined more than 2 percent. The EU fined Google a record 2.7 billion USD, as regulators ruled the company violated antitrust rules. The fine is the largest doled out by Brussels for a monopoly abuse case and follows a seven-year-long investigation. Investigations were triggered after the European Commission received dozens of complaints from U.S. and European competitors who claimed that the company abused its search market dominance to give its Google Shopping service an advantage over other retailers and create a monopoly over consumers. Shares of Facebook, Netflix and Amazon followed Alphabet lower, closing at least 1.5 percent lower.
Technology stocks have been closely watched by Wall Street this year as the sector has outperformed. Entering Tuesday’s session, the sector had gained nearly 20 percent in 2017. Yesterday’s session brought, however, another solid decline of the index. source: Bloomberg
What’s more, the the technical situation points that a continuation of the sell-off could be just behind the corner. As we can see, the Nasdaq index has broken from the post-election upward channel. In addition, the move came after a shooting star (confirmed by a marubozu candlestick) was formed. If so, a move towards 5500 is likely.
Nasdaq could be on the verge of a greater correction. Technicals point that a move towards 5500 remains possible.