Nasdaq 100, S&P 500, Inflation – Talking Points
- S&P 500 makes minimal gains, remains under pressure below 4000
- Nasdaq 100 hovers around 12,000 as macro concerns remain front and center
Stocks continue to fall in the wake of yesterday’s CPI report, with the S&P 500 and Nasdaq 100 erasing gains from the start of the New York session. Risk has come under significant pressure of late, as a plethora of macro concerns weigh on investor sentiment. Wednesday’s session was particularly interesting as there were wild swings following the release of the highly anticipated CPI data, with stocks eventually falling in a cascade throughout the day. Markets may be at a crossroads as Wednesday’s data did little to answer questions about “peak inflation.”
For starters, the CPI print is just a single data point. Market participants and Fed officials will need more data to see if inflation is really rolling over. However, despite printing beating expectations on the YoY and MoM metrics, the CPI was lower in April than it was in March. Perhaps we can sum up yesterday’s dataset as a mixed bag. Much of the risk may reflect this sentiment, as the S&P 500 teeters on the edge of a bear market.
With so many tech stocks brought to their knees by the recent interest rate hike, the Nasdaq 100 continues to suffer severely. Thursday’s session saw the index trade below 12,000 for the first time since November 2020. More pain could be in store as equity markets have yet to show any signs of recovering. true capitulation. That being said, NQ rallied this morning to previous support at 12129. This rally has faded sharply, a true sign of the “sell rally” environment we find ourselves in. a break could see a push to new yearly lows.
Nasdaq 100 Futures (NQ) 1 hour chart
Chart created with TradingView
The S&P 500 has also come under scrutiny lately, as heavy tech weightings within the index continue to drag the benchmark down. To put these weightings into context, Apple alone makes up about 6% of the index, while the broader energy sector makes up 4%. Much like NQ, the S&P 500 once again failed at the previous support, with that level being 3960. As any risk continues to look extremely heavy, the S&P 500 could approach a key zone around 3800. 3802 represents the retracement Fibonacci of 0.618 from the move from the March 2020 low to all-time highs. Investors may be looking to put some dry powder to work in this area, but if this area also fails, we could be in store for some serious pain.
S&P 500 (ES) 1-Hour Futures Chart
Chart created with TradingView
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— Written by Brendan Fagan, intern
Contact Brendanuse the comments section below or @BrendanFaganFX on Twitter