Nasdaq 100, Dow Jones, S&P 500 News: Major Indexes Holding Steady as Investors Eye Potential Rate Cuts

Wall Street Treading Water Nearing Mid-Session

Wall Street’s primary indexes remained largely unchanged as trading approached the mid-session on Friday as investors paused following a week-long rally spurred by rising expectations of U.S. interest rate cuts this year.

At 15:02 GMT, the Dow Jones Industrial Average is trading 39908.49, up 39.11 or +0.10%. The S&P 500 Index is at 5299.16, up 2.06 or +0.04% and the Nasdaq 100 Index is trading 16702.07, up 3.75 or +0.02%.

Indexes on Track for Gains

The S&P 500 and Nasdaq are set to achieve a fourth consecutive week of gains. The Dow Jones Industrial Average, buoyed by strong quarterly earnings and easing inflation, is poised for its fifth weekly advance. On Thursday, all three indexes reached record highs, with the Dow momentarily surpassing the 40,000 mark before reversing and closing slightly lower. While such milestones are noteworthy, market experts emphasize the importance of underlying market fundamentals, including sustainable corporate profits, monetary and fiscal policy, and the broader economic outlook.

Market Fundamentals Remain Positive

Current market conditions are supported by positive economic indicators, which have driven the Dow’s recent performance. Ryan Detrick, chief market strategist at Carson Group, noted that despite last year’s recession fears, the market has rebounded impressively. The concerns of 2022 have not materialized, thanks in part to fiscal support from Congress and a booming technology sector fueled by advancements in artificial intelligence.

Investor Sentiment Shifts

The market’s resilience has been bolstered by a shift in investor sentiment. According to Ed Yardeni, head of Yardeni Research, investors have grown weary of the pessimism that dominated 2022 and early 2023. As a result, the market has started to price in a more optimistic scenario, driven by productivity gains and AI advancements. The Dow has risen nearly 6% in 2024 and over 19% in the past year, although it still lags behind the S&P 500 and Nasdaq, which have posted gains of 11% and 33%, respectively.

Sector Performance and Market Drivers

Advanced Micro Devices (AMD) saw a 3.4% increase after Microsoft announced plans to offer AMD AI chips to its cloud computing customers, challenging Nvidia’s dominance. Among the S&P 500 sectors, utilities underperformed with a 0.3% decline, while energy shares led with a 0.3% gain. Investors are also closely monitoring upcoming speeches from Federal Reserve officials Christopher Waller and Mary Daly for insights into the central bank’s policy direction.

Market Forecast

With traders currently predicting a 68% chance of a rate cut in September, the market’s near-term direction will likely depend on forthcoming economic data, particularly personal consumption expenditures (PCE). Should PCE figures fall below expectations, the market is expected to continue its upward trend. In the short term, the outlook remains bullish, contingent on the Fed’s actions and ongoing economic indicators.

Technical Analysis

E-mini Dow Jones futures buyers seem to be taking a break on Friday after posting a stellar performance throughut the week. While the Dow Jones Industrial Average cash market posted a new all-time high on Thursday, the futures contract continues to lag with investors facing resistance at 40358.

On the downside, minor support at 39405 is a potential trigger point for an acceleration into the intermediate support or 50-day moving average at 39119.

Long-term bullish traders see the divergence between futures and cash as an anomoly. However, some traders may see it as a reason to book profits. Prepare for heightened volatility over the near-term with some investors willing to chase prices higher and others playing for a pullback into support.