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Nasdaq 100, Dow Jones, S&P 500 News: Upward Momentum Stalls Ahead of Mid-Session

By:
James Hyerczyk
Published: Feb 29, 2024, 16:56 GMT+00:00

Key Points:

  • Dow, S&P 500, and Nasdaq show mixed responses
  • US inflation and employment data influence markets
  • Tech sector gains, pending home sales drop
Nasdaq-100 Index, S&P 500, Dow Jones

In this article:

Wall Street’s Mid-Session Boost

As we approach Thursday’s mid-session, Wall Street is mixed after an impressive reaction to a U.S. inflation report that has been more favorable than anticipated, setting an early positive tone for the market.

At 16:33 GMT, the Dow is trading 38934.68, down 14.34 or -0.04%. The S&P 500 Index is at 5079.03, up 9.27 or 0.18% and the Nasdaq-100 Index is trading 15996.73, up 48.99 or +0.31%.

February’s trading session concluded with notable gains across major U.S. stock indexes, despite rising concerns about the longevity of the AI-fueled rally. The Nasdaq led the charge with a 6% gain, followed by the S&P 500 with a 5.1% increase, and the Dow Jones adding 2.3%. This marked the Dow’s first four-month winning streak since May 2021, underscoring a significant period of growth in the stock market.

Inflation Report and Federal Reserve Outlook

A critical driver for today’s market movement is the release of the U.S. Commerce Department’s personal consumption expenditures (PCE) price index. This index, a preferred gauge of inflation by the Federal Reserve, showed a 0.3% increase month-on-month in January, aligning with market predictions. Additionally, a 2.4% yearly increase was reported, which also met the expectations.

This data has fueled speculation among traders that the Federal Reserve might initiate interest rate cuts as early as June. Previously, the expectation was set for March, but recent indicators of persistent inflation and cautious Fed policies led to a recalibration of these expectations to June.

Employment Data and Market Reaction

The employment sector also delivered new data, with initial jobless claims for the week ending February 24th totaling 215,000, slightly above the forecasted 210,000. This figure, while marginally higher than expected, contributes to the belief that the economy maintains a strong foundation.

January Sees Unexpected Decline in Pending Home Sales

In a surprising turn of events, January witnessed a notable 4.9% drop in pending home sales, starkly contrasting with the 2% increase initially forecasted by the Dow Jones consensus. This decline is attributed to the volatile swings in mortgage rates experienced during the month.

Stock Market Performance

The stock market response has been broadly positive, with significant indexes like the Nasdaq leading the charge, thanks to strong quarterly earnings and a surge in interest pertaining to artificial intelligence. Most S&P 500 sub-indexes saw gains, especially in technology sectors sensitive to rate changes.

Notably, Nvidia and C3.ai experienced significant gains, while Snowflake and WW International saw substantial declines. In addition, major cryptocurrency firms like Coinbase Global and MicroStrategy witnessed over 5% increases, aligning with the upward trajectory of Bitcoin.

Congressional Actions and Market Sentiment

The U.S. Congress’s efforts to prevent a partial government shutdown also remain a critical factor. With funding for some federal agencies on the line, their actions could influence market stability.

Short-Term Market Forecast

Considering the current market indicators, the short-term outlook for Wall Street seems bullish. The alignment of the PCE data with estimates, coupled with robust tech sector performance and the potential for Federal Reserve interest rate cuts, suggests a continued upward trend for the market.

Technical Analysis

Daily E-mini S&P 500 Index

E-mini S&P 500 futures are witnessing a downturn, relinquishing earlier gains and suggesting market weariness. The recent rally stalled just below the record high of 5123.50, reflecting tepid investor response despite favorable news. Looking ahead, a downward shift could signal rising selling pressure, especially if driven by valuation concerns. In this scenario, the 50-day moving average at 4907.86 becomes a critical support level to monitor.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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