Nasdaq 100 tears up as investor sentiment brightens, Core PCE takes interest in market direction

U.S. EQUITY OUTLOOK:

  • S&P500 jumps nearly 2%, Nasdaq 100 leads gains on Wall Street, surging 2.8%
  • US April PCE data will be the center of attention friday
  • This article takes a look at the key technical levels to watch in the Nasdaq 100 over the next few days

Most read: S&P 500 rallies as traders bet on potential FOMC pause in September

US stocks soared on Thursday, extending Earnings from previous session as downside buyers rushed to pick up downed stocks in hopes that the worst of the recent selloff was over. At the close, the S&P 500 climbed 1.99% to 4,057, its highest close since May 17, as the consumer discretionary sector led the rise on strong earnings from Macy’s, Dollar Tree and Dollar General. For its part, the Nasdaq 100 led the rise among the major averages, jumping 2.79% to 12,276, boosted by strong daily performances from Tesla, Amazon and Meta.

While the rally is welcome, this decision could be attributed in part to portfolio rebalancing at the end of the month rather than a change in the underlying trend – after all, the economic headwinds did not disappear overnight. next day. By way of background, several banks indicated that big funds could be purchase between 34 and 56 billion dollars of actions close to May closing achieve asset allocation targets following the recent Wall Street pullback. It’s also possible that the bullish move was amplified by thinner liquidity conditions ahead of the Memorial Day holiday.

Looking ahead, the Basic Personal Consumption Expenditure Price Index, the Fed’s preferred inflation gauge,will be the highlight of the U.S. economic calendar on Friday. For sentiment to continue to improve, data will need to show that inflationary pressures peaked in the first quarter and have begun to subside at a rapid pace.

We will know tomorrow if the slowdown in inflation was significant last month, but consensus forecasts point to a decline in core CPI in April to 4.9% yoy from 5.2% yoy in March (the lower the number the better for technology actions and the Nasdaq 100). Given that this is a high impact report, it could trigger high volatility ahead of the weekend, especially if the results surprise relative to expectations, with low trading volume. perhaps amplify price fluctuations.

NASDAQ 100 TECHNICAL ANALYSIS

The Nasdaq 100 extended its lead on Thursday, buoyed by positive overall sentiment after some U.S. retailers posted strong profits. After all the twists and turns, the tech index managed to break and close above key resistance at 12,250, a sign that bullish momentum is building. To be sure this is not another dead cat bounce, an upward follow-up will be needed in future sessions. On that note, if we see more gains, the next hurdle appears at 12,600. Stronger, the focus shifts towards the psychological level of 13,000.

On the other hand, if the sellers return to mitigate the tear, as has happened many times during this bear market, initial support is found at 12,250 followed by 11,492 2022 lows. .

NASDAQ 100 TECHNICAL CHART

Nasdaq 100 chart prepared using TradingView

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—Written by Diego Colman, Market Strategist for DailyFX

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