Nasdaq 100, S&P 500 summary:
U.S. consumer inflation expectations fell to 5% from 5.2%, signs of peaking inflation could boost stocks; S&P 500 futures rise above key resistance levels, 4000 psychological price is about to be tested; Nasdaq 100 Futures are expected to test the 50-day moving average.
U.S. consumer inflation expectations fall
Inflation, interest rates and expectations of a global recession are the three themes that remain prevalent in 2023. Friday’s non-farm payrolls report drew mixed reactions as inflation remained well above the Fed’s 2% target.
The U.S. unemployment rate fell to a multi-decade low of 3.5%, wage growth slowed and weak ISM data suggested that price pressures may continue to ease.
While the outlook for economic growth remained under pressure, hopes of a Fed turnaround were revived, and a drop in U.S. bond yields pushed the dollar lower, fueling a stock market rally.
S&P 500 Technical Analysis
The index has been trading inside a symmetrical wedge for the last week, though prices climbed above 3900 on Friday, recording a high of 3928.
S&P 500 daily chart
Chart compiled by Tammy Da Costa using TradingView
Potential resistance levels: 4000, downtrend line (currently at 4110), 4150.
Nasdaq 100 Index Technical Analysis
For the Nasdaq 100, a break above the 88% Fibonacci level in 2022 at 11214 could lead to a test of the 50-day moving average (currently at 11422).
The next resistance could be at the 11500 psychological level.
Nasdaq 100 Index Daily Chart
Chart compiled by Tammy Da Costa using TradingView
Looking ahead, Federal Reserve Chairman Powell will deliver a speech at 22:00 on Tuesday, and the US CPI will be announced on Thursday, which is expected to grow by 6.5% year-on-year.
If the Fed’s comments are more dovish, and Thursday’s US CPI data continues to show positive signs of a pullback, the stock market may find support in the short term.
(by Tammy Da Costa)
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