Dow Jones, S&P 500 Struggle as Sentiment Remains Fragile
MarketPulse | May 06, 2025 09:33AM ET
U.S. stock futures suggest a second day of losses. Palantir's (NASDAQ:PLTR) stock fell 9% in early trading after disappointing results. Ford's stock also dropped after pulling its financial outlook and warning about the impact of tariffs.
DoorDash (NASDAQ:DASH) dropped 5% after announcing it would buy Deliveroo in a deal worth about 2.9 billion pounds ($3.86 billion). The company's quarterly revenue fell short of expectations, leaving investors disappointed.
A nine-day rally that was the longest the S&P 500 had seen in roughly two decades came to an end on Monday.
Sentiment took a further hit after HKMA said it has been reducing how long it holds U.S. treasuries and has been shifting the exchange fund into non-U.S. assets.
In European trade, Friedrich Merz faced an unexpected setback when he failed to secure enough votes to become Germany's next chancellor. This delayed his swearing-in and left Europe's largest economy in uncertain waters. The DAX dropped 1.4%.
According to reports, however, German lawmakers plan to vote on Merz again at 3:15 PM in Berlin, with Senior German Conservative Spahn saying they will nominate Merz for Chancellor.
On the FX front, the US Dollar continues to face selling pressure as sentiment and diminishing safe haven appeal weigh on the greenback. As a result, GBP/USD has been on a steady move higher throughout the day, trading at 1.3386 at the time of writing.
Gold has held onto overnight gains as the precious metal approaches a key level of resistance around the $3400/oz handle.
Meanwhile, markets continue to grapple with tariff developments. The lack of certainty on proposed deals continues to weigh on sentiment despite comments from lawmakers in India who say trade deal negotiations are largely positive.
President Trump said on Monday night that he plans to announce new pharma tariffs in the next two weeks. These tariffs are his latest move that has unsettled global financial markets and follows Sunday's announcement that he would impose tariffs on foreign-made movies.
Economic Data Releases
For now, the US calendar remains quiet ahead of a barrage of data kicking off tomorrow. Earnings are also quiet today and tomorrow before an uptick on Thursday.
President Trump is, however, scheduled to meet with Canadian Prime Minister Mark Carney today, with any further comments around tariffs likely to impact sentiment. Also, the outcome of the vote in Germany may also add some volatility during the US session.
Chart of the Day - Dow Jones Index (DJIA)
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From a technical standpoint, the Dow Jones has been unable to build on last week's gains.
Looking at the H4 chart below and the price action is mixed with yesterday's higher high being followed by a selloff and the index now printing a lower low.
This is a clear sign of the indecision in markets at the moment. Having printed a low, however, there is a possibility of a short-term pullback, but such a move may face significant hurdles at the 41000 and 41100 handles. Beyond that, the next key area would be yesterday's highs around the 41400 handle.
If the selloff is to continue, immediate support may be found at 40738 and 40537, respectively.
Dow Jones Four-Hour Chart, May 6, 2025
Source: TradingView.com
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