US Stocks Hit on Valuation Concerns – Nasdaq down 1.4%
US equity markets closed lower overnight as investors took profits from the technology sector amid renewed concerns surrounding elevated valuations and the pace of AI-related investment. At the same time, geopolitical tensions in the Middle East continued to simmer, weighing on overall market sentiment. The Nasdaq led the declines, falling 1.47% to close at 25,881, while the S&P 500 lost 0.51% to finish at 7,533. The Dow Jones Industrial Average was comparatively resilient, easing 0.20% to close at 52,552.
US Treasury yields edged modestly higher as investors continued to assess the outlook for inflation and Federal Reserve policy. The 2-year Treasury yield rose 0.9 basis points to 4.141%, while the benchmark 10-year yield added 0.6 basis points to finish at 4.553%. The US Dollar Index also strengthened, gaining 0.21% to 100.70 as demand for the greenback remained supported by ongoing geopolitical uncertainty.
Oil prices traded slightly lower despite continued missile and drone strikes across the Gulf region, suggesting traders remain focused on current supply levels while closely monitoring any further escalation that could disrupt energy exports. Brent crude declined 0.85% to settle at US$84.23 per barrel, while West Texas Intermediate fell 0.71% to US$79.60 per barrel.
Gold was the standout mover of the session, retreating sharply as investors locked in profits following its recent rally. The precious metal fell 2.23% to US$3,969.94 per ounce, pushing prices back towards their lowest levels of the year.
Gold Again in Focus After Closing Below $4,000
Traders are again expecting another busy day in the Gold market after the world’s favourite precious metal closed the trading day below $4,000. This is the first time that it has closed under $4,000 this year, despite trading lower, and technical traders have also noted that it has now broken below the key long-term support trendline on the daily charts. The next target is the annual low at $3,942.00, and a break below this level in the coming sessions should open the way for a move much further south, with the next key support level around $3,600. Any rallies, which are likely to come from general dollar weakness, will find initial resistance on recent highs and then on the longer-term resistance trendline, currently around $4,100.
Quiet Calendar Day to Close Out the Week
Attention now turns to a relatively quiet end to the trading week from an economic data perspective. There is little of note in both the Asian and London sessions today, while the key releases during the US session will be the preliminary University of Michigan Consumer Sentiment survey (exp. 50.5) and Inflation Expectations data. While these reports could influence expectations for the Federal Reserve’s interest rate outlook, market sentiment is likely to remain heavily influenced by developments in the Middle East as traders head into the weekend.
Explore all upcoming market events in the Economic Calendar.
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