Dow Jones & Nasdaq 100: US Futures Edge Up Despite Weak China Data

US stock futures faced testy waters in the Asian session on Friday, November 14, after Thursday’s sharp sell-off driven by fading December Fed rate cut bets.

However, gains were modest as fading Fed rate cut expectations and weak Chinese economic indicators limited the recovery.

According to the CME FedWatch Tool, the chances of a December Fed rate cut slid from 62.9% on Wednesday, November 12, to 50.7% on Thursday, November 13, weighing on sentiment. Market focus returned to the Fed’s policy stance following the government reopening.

China Factory Output, Retail Sales, and House Prices Test Risk Sentiment

Fading rate cut bets collided with Chinese economic data that signaled a further loss of momentum.

Key data included:

• Industrial production rose 4.9% year-on-year (YoY) in October, down from 6.5% in September.
• Retail sales rose 2.9% YoY, cooling from 3% in September.
• Fixed asset investment fell 1.7% YoY, accelerating from a 0.5% drop in September.
• Unemployment slipped from 5.2% to 5.1% in October.
• House prices fell 2.2% YoY, matching September’s decline.

Crucially, the continued decline in house prices risks further denting consumer sentiment and spending, challenging Beijing’s 5% GDP growth target.

The housing sector remains a focal point. Policy measures targeting the sector could lift sentiment, potentially boosting domestic demand. A pickup in household spending could help buffer China’s reliance on external demand, which is being weighed down by US trade policies.

HSBC analysts reportedly highlighted the need for further policy support in a research note on Thursday, November 13. CN Wire reported:

“China’s cooling high-end real-estate market is raising short-term uncertainties. HSBC analysts say in a research note, and call for more policy support. Developers’ project launches have been delayed slightly due to subdued sales momentum. […] The property market is entering a period of softened sentiment, stuck in a policy vacuum.”

Residential housing sales areas reportedly slid 6.8% YoY in October, down sharply from September’s 5.5% drop.

US Stock Futures: US Data and the Fed in Focus

Futures trended higher during Friday’s Asian session. The Dow Jones E-mini gained 55 points, the Nasdaq 100 E-mini advanced 43 points, while the S&P 500 E-mini gained 11 points.

Later on Friday, US economic indicators will face market scrutiny as traders await delayed reports to assess inflation trends and labor market conditions. US producer prices and retail sales figures are set for release. Further delays to economic data releases may test demand for US stock futures. A lack of data has grown concerns about the labor market and the Fed rate path.

Risk assets could face another day of intense selling if producer prices edge higher and retail sales dip in October. Rising inflationary pressures and weakening consumption would signal stagflation risks. With the Fed focused primarily on inflation, rising stagflation risks could send US stock futures lower for the second session.

Beyond the numbers, traders should closely monitor FOMC members’ speeches. Views on inflation, the labor market, and monetary policy will move the dial.

Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500

Despite Thursday’s sell-off, US stock futures remained well above their key technical levels, indicating a bullish bias.

Near-term trends will hinge on US data and Fed chatter. Key levels to monitor include:

Dow Jones:

• Resistance: 48,000 and the November 12 record high of 48,528.
• Support: 47,500, 47,000, and the 50-day EMA (46,779).

Nasdaq 100

• Resistance: 25,500, 26,000, then October 30 record high of 26,399.
• Support: the 50-day EMA (25,000), then 24,750.

S&P 500

• Resistance: October 30 record high of 6,954, then 7,000.
• Support: the 50-day EMA (6,721) and 6,500.

Market Outlook: US Data in Focus

US economic data and Fed speakers could continue to fuel market volatility as economists assess the impact of the shutdown on momentum.

The release of delayed labor market and inflation reports exposes US stock futures to stagflation risks, a market headwind. Rising stagflation risks would send US stock futures lower.

Given these competing market forces, US stock futures are set for another choppy session ahead.

Follow our live coverage and consult the economic calendar for real-time market updates.