The Dow Jones Industrial Average, S&P 500 and the NASDAQ Composite indices rose and made record highs last week. Inflation data coming in lower than market expectation aided the benchmark indices to rise sharply on Friday and close the week on a strong note.
We had expected the upside to be capped and the indices to fall last week. That view has gone wrong. The Dow Jones and NASDAQ Composite indices were up over 2 per cent each. The S&P 500 was up 1.92 per cent.
The rise over last couple of weeks has reduced the danger of the fall that we have been cautioning. The broader uptrend continues to remain intact.
Will the benchmark indices sustain higher and make new highs? Here is our analysis:
Dow Jones (47,207.12)
The rise last week keeps the broader uptrend intact. Immediate support is at 47,000. Below that, 46,500 and 46,000 are the next important support. The Dow Jones has the potential to target 49,000-49,500 on the upside in the coming months.
The short-term view will turn negative only if the index declines below 46,000. In that case, a fall to 45,500-45,000 will come into the picture. From a long-term perspective, the Dow has to decline below 45,000 to turn the outlook bearish.
S&P 500 (6,791.69)
The S&P 500 is more likely to breach 6,800. Such a break can take it up to 6,900, the next crucial resistance. Failure to break 6,900 can drag the index down to 6,800 and lower again. If it manages to breach 6,900 then an extended rise to 7,000-7,100 is possible before a downward reversal is seen.
Immediate support is at 6,750. Failure to breach 6,800 now and a subsequent fall below 6,750 will increase the danger of the fall to 6,700-6,600 again.
NASDAQ Composite (23,204.87)
The NASDAQ Composite index has risen well breaking above the 23,000-23,100 resistance zone. Support for the week is at 22,950. The outlook is bullish. The NASDAQ Composite index can rise to 23,400 initially. A break above 23,500 can then take the index up to 23,900-24,000 eventually in the short term. The price action around 24,000 will need a close watch to see if a reversal is happening or not.
The region between 22,300 and 22,000 is a crucial support. A fall below 22,000 is needed to turn the outlook bearish for the NASDAQ Composite index.
Dollar outlook
The dollar index (98.95) broke the resistance at 98.60 but did not get a strong follow-through rise. The index remained stable in a narrow range in the second half of the week.
The region between 98.65 and 98.45 is a good support zone. If the dollar index continues to sustain above this support, a rise to 99.80-100 can be seen in the short term.
A fall below 98.45 is needed to turn the outlook bearish. Only in that case a fall to 98 and lower levels will come into the picture.
Treasury Yields
The US 10Yr Treasury Yield (4 per cent) has support near 3.93 per cent. That keeps the chances of seeing a rise to 4.05-4.1 per cent high. The price action thereafter will need a close watch.
A reversal from around 4.1 per cent can drag the yield down to 3.9-3.85 per cent. A decisive break above 4.1 per cent is needed to negate this fall and see a rise to 4.2 per cent.
Data Watch
The US Headline Consumer Price Index (CPI) and the Core CPI rose 3.02 and 3.03 per cent (year-on-year) respectively in September. Market was expecting both to rise by 3.1 per cent. Soft inflation number has strengthened the case for the US Federal Reserve to cut rates.
The Fed meeting outcome is due this week on Wednesday. In its economic forecast released in September, the central bank had kept the doors open for another 50-basis point rate cut for the rest of the year. So, the probability of a rate cut this week is very high.
Published on October 25, 2025