By Gurumurthy K

Copyright thehindubusinessline

The Dow Jones Industrial Average, S&P 500 and the NASDAQ Composite indices witnessed a strong rise last week. All the three indices hit their record highs. The Dow Jones and S&P 500 were up over a per cent. The NASDAQ Composite index on the other hand surged over 2 per cent.

The dollar index and the US Treasury yields have made a strong recovery from their lows last week. The trigger for the bounce came after the US Federal Reserve sounded less dovish and raised concerns about a weak job market.

Here is an analysis of how the US markets can perform going forward:

Dow Jones (46,315.27)

The bullish view is intact. The rise to 46,700-46,800 is happening in line with our expectation. After this rise, a corrective fall to 46,000-45,500 is a possibility. The chances of the fall extending to 45,000 cannot be ruled out.

However, the big picture will continue to remain bullish as long as the Dow sustains above 45,000. As such a reversal anywhere from the broad 46,000-45,000 will have the potential to take the Dow Jones up to 50,000 over the long term.

S&P 500 (6,664.36)

The index is heading up towards 6,700 as expected. The bullish view is intact. The S&P 500 can target 6,800 in the coming weeks. This level of 6,800 is a crucial resistance to watch.

A reversal from around 6,800 can drag the index down to 6,600-6,500 and even lower going forward. As such the price action around 6,800 will need a close watch. Also, it is important to remain more cautious than being extremely bullish as the index moves up to 6,800.

NASDAQ Composite (22,631.48)

The upmove in the index is gaining momentum. A rise to 22,800 and even 23,000-23,300 is possible in the coming weeks. After this rise, a corrective fall to 22,000 is a possibility. The chances of the fall extending beyond 22,000 will have to be seen. A break below 22,000 will increase the danger of seeing 20,000 on the downside. This can be the worst-case scenario.

However, from a long-term perspective, the NASDAQ Composite index has potential to target 26,000 and higher as long as it stays above 20,000.

Dollar outlook

The support at 96 on the dollar index (97.64) is holding well now. Immediate resistance is around 98. A strong break above it can take the dollar index up to 99. Broadly, 96-100 is the trading range. The dollar index can rise towards the upper end of this range now.

Failure to breach 99 can take the index down to 97-96 again.

Treasury Yield

The US 10Yr Treasury Yield (4.13 per cent) has risen back well from the low of 3.99 per cent. Support will now be around 4.1 per cent. A rise to 4.2 per cent is possible this week. The price action thereafter will need a close watch.

A break above 4.2 per cent will see an extended rise to 4.3-4.35 per cent. On the other hand, a reversal from around 4.2 per cent can drag the yield down to 4.1-4 per cent again.

The US Federal Reserve cut the rates by 25-basis points (bps) as expected last week. It has also kept the doors open for another 50-bps rate cut for this year. The central bank now seems to be more worried about the job market than the inflation.

For the coming week, the US Personal Consumption Expenditure (PCE), the Fed’s inflation gauge data, is due for release on Friday.

Published on September 20, 2025