The S&P, Nasdaq, and Dow had their biggest drop since May 21, triggered by rising tensions between Israel and Iran. This led to a wave of selling in the markets. By the end of the day, all major indices were down by -1.13% or more. The Dow Industrial Average fell by -769.83 points, or -1.79%, closing at 42,197.79, below its 200-day moving average of 42,502.38 and 100-day moving average of 42,233.09.

Market Indices Performance

The S&P index dropped by -68.29 points, or -1.13%, ending at 5,976.97. After dipping below, it recovered to its 100-hour moving average support at 5,964.44. The NASDAQ index decreased by -255.66 points, or -1.30%, closing at 19,406.83, after testing its 100-hour moving average at 19,390.24. For the week, all indices declined: the Dow Industrial Average fell by -1.32%, the S&P by -0.39%, and the Nasdaq by -0.63%. This shows a downward trend influenced by global events. This report highlights a significant market pullback due to escalating conflict between Israel and Iran, generating widespread selling across major U.S. stock indices. All three benchmarks continued to decline through the week. The weekly and daily percentage drops show how quickly the market reacted to these events. It’s clear that external shocks are greatly impacting market price movements, not just causing short-term fluctuations. The Dow Jones Industrial Average has dropped below its 200-day and 100-day moving averages, which traders often use to gauge buying interest during longer trends. This suggests a shift in market sentiment. Falling below these levels typically signals increased risk aversion among investors, leading to stronger selling pressure from passive fund managers who track momentum indicators. Meanwhile, the S&P index rebounded after touching its 100-hour moving average, indicating some short-term buyers stepped in, but the recovery wasn’t strong. A drop below this moving average often attracts attention from futures traders. While the support held initially, the broader weak closing for the week suggests that long-term investors may not be buying in yet.

Technicals and Market Sentiment

The Nasdaq followed a similar path, testing its support and closing slightly above but lacking true buying interest. Technical levels are currently driving automatic orders, but there’s not enough conviction to change direction decisively. Weakness in growth stocks likely reflects more than just temporary fears. Right now, the market is very sensitive to geopolitical events, meaning direction is often shaped by news headlines rather than earnings or economic data. Traders should factor in these external catalysts, particularly over weekends, as gaps can disrupt strategies. This situation may create broader opportunities for options traders, but it requires precise timing and frequent adjustments. Given the recent movements around key technical areas, trading in futures-related products may react faster to established hourly levels rather than traditional swing positions. There’s a visible shift in overnight trading behavior, especially in time zones that overlap. It’s important to monitor liquidity during late trading sessions and its impact on sell-offs or quick rebounds. Additionally, the ongoing weakness—even towards the close—indicates less institutional support at current price levels. This suggests that automated trading strategies will likely dominate market flow until macro or political changes bring back stronger discretionary interest. Interim trades should adopt stricter risk tolerances, especially when exposure aligns with recent broader averages. The recorded movements often align with changes in hedging behavior. If pressure on key technical levels continues in the coming days, option repricing may outpace movements in the underlying assets, potentially leading to larger gamma-related swings around high-volume points. From our analysis, derivative traders focusing on intraday reversals should pay attention to rebound attempts near hourly averages, but not assume they’re sustainable without corresponding volume. We believe the market currently favors more controlled downside probing rather than strong upward moves. If prices stay below daily averages without strong closes above critical resistance, the easiest path continues to be downward through the next week. Create your live VT Markets account and start trading now.

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