Wall Street’s three main indexes weakened last week as tighter monetary policy signals from the Federal Reserve and the war between Ukraine and Russia continues to make investors nervous.

U.S. central bank signaled one or more 50 basis-point interest rate hikes in the months ahead and the shrinking of the portfolio of securities by $95 billion a month to tackle strong inflationary headwinds in the U.S. David Bahnsen, chief investment officer at Bahnsen Group, said:

Since peaking at two-month highs in late March, the market has trended lower as the Fed signals it will aggressively hike rates, leading investors to reposition their portfolios. Economically sensitive value shares this year have outperformed tech-heavy growth stocks, which often depend on low rates.

The U.S. added 431K jobs in March, which fuels the U.S. Federal Reserve’s view of a solid labor market and justifies a more aggressive pathway to higher rates.

FED members believe that inflation is likely to continue higher than predicted for longer, and it is important to say that the Food Price Index hit a new record high of 159.3 in March, up by almost 13% from February.

Fed Chair Jerome Powell also warned that interest rates could rise quicker than previously expected and raised the possibility of a 50-basis-point hike in rates in May.

The impact of the Russian-Ukrainian war also negatively influences inflation, and many companies look to find other sources for their parts because of supply chain issues. Since the invasion, raw materials and commodities prices have surged, intensifying already-high inflation.

Russian forces continued with operations and reportedly bombed a rail evacuation hub in territory held by Kyiv, and for now, we can not see the light at the end of the tunnel.

The U.S. will release consumer and producer price indexes, March retail sales, and March industrial production next week, but investors’ focus will also be on the quarterly earnings reports.

Next week, JPMorgan, Citigroup, Morgan Stanley, Goldman Sachs, Delta Air Lines, and UnitedHealth Group will report quarterly results.

S&P 500 down -1.3% on a weekly basis

For the week, S&P 500 (SPX ) weakened by -1.3% and closed at 4,488 points.

Data source: tradingview.com

The upside potential is probably limited for the week ahead, and if the price falls below 4,200 points, it would be a strong “sell” signal.

DJIA down -0.30% on a weekly basis

The Dow Jones Industrial Average (DJIA) weakened -by 0.30% for the week and closed at 34,721 points.

Data source: tradingview.com

The important support level stands at 34,000 points, and if the price falls below this level, the next target could be 33,500 points. If the price jumps above 35,000 points, the next target could be resistance at 35,300 points.

Nasdaq Composite down -3.9% on a weekly basis

Nasdaq Composite (COMP) has lost -3.9% on a weekly basis and closed at 13,711 points.

Data source: tradingview.com

The upside potential for Nasdaq Composite remains limited, and if the price falls again below 13,000 points, it would be a strong “sell” signal.

Summary

The Dow Jones, the S&P 500, and the Nasdaq ended lower last week as tighter monetary policy signals from the Federal Reserve and the war between Ukraine and Russia continues to make investors nervous.

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