Wall Street’s three main indexes weakened last week as surging inflation and rising interest rates continue to keep investors in a negative mood. Recent disappointing forecasts from big retailers Walmart, Kohl’s Corp, and Target are evidence that rising prices have started to hurt the purchasing power of U.S. consumers.

The U.S. Federal Reserve raised the interest rate by 50 bps this month, which was the first such increase in over twenty years, and investors currently expect 50-basis point rate hikes in June and July.

Federal Reserve Chair Jerome Powell said that a 75 basis point increase is not being “actively” considered, but risk-aversion persists as growth and inflation data become more worrisome.

It is also important to mention that the U.S. growth has been downwardly revised by different financial institutes throughout the week. JP Morgan and Wells Fargo are now expecting the economy to grow at a slower pace than previously estimated. Eric Schiffer, chief executive officer of private equity firm The Patriarch Organization, said:

The market is absorbing the potential of a recession and will continue to deal with this challenge of determining what is proper valuation at a time when earnings are likely to be lower, and the Fed is likely to continue to hold the line.

The Dow Jones Industrial Average ended down 15.1% from its early-January record close, S&P 500 ended down 20.6% from its January 3 record close, and the Nasdaq Composite closed the week down 29.3% from its November record finish.

The global chaos is also fueling the risk-averse sentiment, and tensions between Russia and western nations negatively influence financial markets.

Sweden and Finland’s desire to join NATO has escalated tensions with Moscow, and Russian Deputy Chairman Dmitry Medvedev warned that Russia would take “retaliatory steps” over these moves.

S&P 500 down -3.05% on a weekly basis

For the week, S&P 500 (SPX ) weakened by -3.05%, which marked the S&P 500’s seventh weekly loss in a row. The S&P 500 closed at 3,901 points, and it is important to mention that this is the SPX’s longest run of weekly losses since an eight-week losing streak in February-March 2001.

Data source: tradingview.com

The upside potential remains limited for the weak ahead, and if the price falls below 3,500 points, the next target could be 3,000 points which represents a strong support level.

DJIA down -2.90% on a weekly basis

The Dow Jones Industrial Average (DJIA) weakened -by 2.90% for the week and closed at 31,261 points.

Data source: tradingview.com

The Dow Jones Industrial Average suffered its eighth consecutive weekly decline, its longest since 1932 during the Great Depression.

The strong support level stands at 30,000 points, and if the price falls below this level, it could be the beginning of a much stronger sell-off.

Nasdaq Composite down -3.82% on a weekly basis

Nasdaq Composite (COMP) has lost -3.82% on a weekly basis and closed at 11,354 points.

Data source: tradingview.com

This marked Nasdaq’s seventh weekly loss in a row, and if the price falls below 11,000 points, the next target could be 10,500 points.

Summary

The Dow Jones, the S&P 500, and the Nasdaq ended lower last week as surging inflation and rising interest rates continue to keep investors in a negative mood. Recent disappointing forecasts from big retailers Walmart, Kohl’s Corp, and Target are evidence that rising prices have started to hurt the purchasing power of U.S. consumers.

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