Home Forex Markets S&P 500, Nasdaq 100 Outlook: Bottom signs of inflation are a big plus

S&P 500, Nasdaq 100 Outlook: Bottom signs of inflation are a big plus

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S&P 500, Nasdaq 100 Outlook: Bottom signs of inflation are a big plus

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

S&P 500, Nasdaq 100 Outlook: Bottom signs of inflation are a big plus

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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