S&P 500 fell below 4300 on its worst day since March, and the Dow Jones plunged on risk aversion

• The S&P 500, the Dow Jones, and the Nasdaq Composite recorded losses in a risk-off market mood.
• Fed speakers in the week support 50-bps rate hikes at the May 4-5 meeting.
• US Treasuries and the greenback finished the week higher amidst hawkish Fed comments.

US equities finished the week with substantial losses, reflecting a gloomy market mood amid concerns that the Fed would hike rates aggressively and high US Treasury yields. The S&P 500, the Dow Jones Industrial, and the tech-heavy Nasdaq Composite nose-dived recording losses between 2.6% and 2.8%, each sitting at 4,271.78, 33,811.40, and 12,839.29, respectively.

The Fed prepares the market for a 50-bps lift off

The market sentiment finished downbeat as the Federal Reserve prepared to lift rates to the 1% threshold. US central bank officials crossed the wires throughout the week and expressed that they favor a 50-bps lift to the Federal Funds Rate (FFR) at the May 4-5 meeting. It is expected to be a unanimous decision, as Fed Chair Powell gave the green light on Thursday, saying that a 50-bps increase is “on the table.”

In the meantime, the greenback remains in the driver’s seat, as depicted by the US Dollar Index, rising 0.49%, sitting at 101.118, while US Treasury yields, led by the 10-year benchmark note, finished flat at 2.903%.

• Also read: US Dollar Index reached a two-year-high at 101.331 on Fed policymakers comments

In terms of sector specifics, the less damaged were Consumer Staples, Utilities, and Real Estate, falling 1.59%, 1.68%, and 1.78% each. The worst performers were Materials, Health, and Communication Services, losing 3.73%, 3.63%, and 3.30%, respectively.

In the commodities complex, the US crude oil benchmark, WTI, lost 2.22%, trading at $101.08 a barrel, while precious metals like gold (XAU/USD) recorded losses of 1.04%, exchanging hands at $1931.12 a troy ounce, dragged down by a firm US dollar.

• Also read: WTI continues to trade in subdued in low $100s as oil traders mull slowing growth versus supply worries
• Also read: Gold Price Forecast: XAUUSD bears eyeing a break of the 50-DMA around $1930s

The week ahead in the US docket

The economic calendar for the US would feature March’s Durable Goods Orders, the US Gross Domestic Product for the Q1, and the Core Personal Consumption Expenditure (PCE) for March on annual and monthly readings, alongside the Chicago PMI.

Key Technical Levels