Dow Jones & Nasdaq 100: Weak Yen and Nvidia Rally US Futures

US stock futures rally during the Asian session on Thursday, November 20, building on the previous day’s gains. Nvidia’s results topped expectations for both earnings and revenue after the closing bell on Wednesday, November 19, setting the tone for the Asian session. Crucially, Nvidia’s strong results and outlook eased market jitters about AI stock valuations, boosting sentiment.

The Kobeissi Letter quoted Nvidia CEO Jensen Huang, who reportedly stated:

“There has been a lot of talk about an AI Bubble. We see something different.”

The Asian equity markets rallied in morning trading, joining US equity futures in positive territory. Notably, the Nikkei 225 led the gains, soaring 3.06% to break above 50,000. A weaker Japanese yen added to the morning gains amid concerns about the Japanese Prime Minister’s fiscal policy goals.

USD/JPY Soars, Fueling Yen Carry Trades

The overnight FOMC Meeting Minutes signaled division among policymakers over a December rate cut. Concerns about inflation collided with reports of further delays to key US jobs data, sinking bets on further monetary policy easing. According to the CME FedWatch Tool, the chances of a December cut fell from 50.1% on November 18 to 32.8% on November 19.

Fading expectations for a December Fed rate cut collided with concerns about Prime Minister Sanae Takaichi’s fiscal stimulus plans, sending USD/JPY to a 10-month high of 157.474 in morning trading. The weaker yen fueled the carry trade into risk assets, including US stock futures. Bullish sentiment overshadowed concerns about the Fed rate path.

US Stock Futures: Fed Speakers in Focus

Futures posted solid gains during the Asian session. The Dow Jones E-mini jumped 292 points, the Nasdaq 100 E-mini soared 463 points, while the S&P 500 E-mini advanced 86 points.

Later on Thursday, traders should closely monitor FOMC members’ speeches in the wake of Wednesday’s FOMC Meeting Minutes. Growing calls to delay further rate cuts could temper demand for risk assets. Crucially, reports of further delays to US jobs data will likely leave the Fed fixated on inflation, given policymakers’ views that the labor market is cooling, not collapsing.

According to The Kobeissi Letter:

“The US Labor Department announces that it is canceling the October jobs report.”

The BLS also announced a delay to the release of the November jobs report from December 5 to December 16. The delay will leave the Fed flying blind on jobs data going into the December 9-10 FOMC meeting.

While economic and monetary policy uncertainty remains a headwind for US equity futures, Nvidia’s earnings will likely continue bolstering risk appetite.

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

After Wednesday’s rally and this morning’s gains, the Nasdaq 100 E-mini and S&P 500 E-mini traded above their 50-day and 200-day EMAs, signaling a bullish bias. However, the Dow Jones E-mini remained below its 50-day EMA, indicating a bearish bias.

Near-term trends will hinge on Fed speakers and corporate earnings. Key levels to monitor include:

Dow Jones

• Resistance: 50-day EMA (46,717), 47,000, 47,500, and the November 12 record high of 48,528.
• Support: 46,000, then 45,500.

Nasdaq 100

• Resistance: 25,500, 26,000, then the October 30 record high of 26,399.
• Support: the 50-day EMA (24,976), 24,500, then 24,000.

S&P 500

• Resistance: the October 30 record high of 6,954, and then 7,000.
• Support: the 50-day EMA (6,715), 6,500, and then 6,250.

Market Outlook: US Earnings and Fed Set the Tone

Markets face a key US session as corporate earnings and Fed speakers take the spotlight. Walmart Inc. (WMT) and The Gap, Inc. (GAP) are on the earnings calendar. Crucially, earnings and forward guidance will provide insights into the US economy in the absence of key government reports.

FOMC members’ speeches will also influence sentiment, given the waning expectations of a December rate cut.

Disappointing earnings and hawkish Fed rhetoric would likely cool the post-Nvidia market euphoria.

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