Nasdaq 100, Dow Jones, S&P 500 News: Struggling Mid-Session as Inflation Expectations Rise

US Stock Market Daily Review

The major US stock indices demonstrated mixed performance as the trading week concluded, with the Dow Jones Industrial Average showing resilience, the S&P 500 gaining ground, while the Nasdaq Composite experienced a dip. Notably, all three indices are set to close the week in the green, with the Dow, S&P 500, and Nasdaq up 2.2%, 1.9%, and 1.3% respectively.

At 15:20 GMT, the Dow Jones Industrial Average is trading 39455.84, up 68.08 or +0.17%. The S&P 500 Index is at 5216.64, up 2.56 or +0.05% and the Nasdaq 100 Index is trading 16328.28, down 17.98 or -0.11%.

Key Stock Movements

3M emerged as a standout performer within the Dow, its shares climbing approximately 1.1% following an upgrade from HSBC. Conversely, Alphabet’s stock declined by over 1% amid news from a Reuters report suggesting that OpenAI is poised to introduce a competing search engine, potentially as early as Monday.

Biotech and Pharma Developments

In the pharmaceutical sector, Novavax made headlines with a substantial 125% surge in its share price during premarket trading. This dramatic increase followed the announcement of a multibillion-dollar agreement with Sanofi to co-commercialize its Covid vaccine starting next year. The deal not only provides Novavax with significant upfront and potential payments but also allows it to retract its previous “going concern” warning.

Economic Indicators and Sentiment

The economic landscape was partly overshadowed by the latest consumer sentiment data, which revealed a stark decline to 67.4, significantly below expectations and marking a six-month low. This decline was driven by heightened inflation expectations and concerns about future economic conditions affecting unemployment and interest rates.

Inflation and Interest Rates Forecast

The inflation outlook has notably darkened according to the Philadelphia Fed’s quarterly Survey of Professional Forecasters. The survey indicated that core inflation is expected to remain above the Federal Reserve’s 2% target through 2024, suggesting prolonged inflationary pressures. This has implications for the Federal Reserve’s interest rate decisions, which are currently leaning away from hikes, potentially supporting equities.

Short-Term Forecast

Looking ahead, the market sentiment is cautiously optimistic. Despite rising inflation concerns, the likelihood of a maintained cap on interest rates may provide some buoyancy to the equity markets. Traders should monitor consumer sentiment and inflation data closely, as these will be critical in shaping the Federal Reserve’s upcoming policy moves.

Technical Analysis

E-mini Nasdaq-100 Index futures are putting in a mixed performance on Friday. The price action suggests investors are showing respect to the 50-day moving average at 18134.34, which is controlling the intermediate trend.

Holding above this important pivot will keep the record high at 18709.00 on the radar, while a failure to hold this moving average will be a sign of weakness, but not necessarily a change in trend.