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Nasdaq Index, Dow Jones, S&P 500 News: Bearish Sentiment Dominates Early Q2 Trading

By:
James Hyerczyk
Updated: Apr 3, 2024, 12:40 UTC

Key Points:

  • U.S. stock futures show bearish trend amid Fed rate cut speculation.
  • Treasury yields rise, reflecting market concern over Fed's interest rate strategy.
  • Intel's foundry business faces losses, adding pressure on company shares.
Nasdaq-100 Index, S&P 500 Index, Dow Jones

Bearish Winds in Early Q2

The second quarter’s opening has seen U.S. stock futures leaning bearish. The Dow Jones Industrial Average futures are down, with similar downtrends in the S&P 500 and Nasdaq 100 futures. This bearish sentiment comes as traders weigh the Federal Reserve’s potential rate cut pace against a backdrop of persistent inflation and solid manufacturing data.

Treasury Yields in Focus

The Treasury yields have been a key focus, with the 10-year note yield hitting a peak not seen since last November. Despite a recent stabilization, these yield movements reflect the market’s anticipation and concern over the Fed’s interest rate strategy.

Fed’s Rate Cut Speculation

Comments from Federal Reserve officials, including Cleveland’s Mester and San Francisco’s Daly, suggest rate cuts are on the horizon, but not immediately. Their cautious stance, waiting for more definitive signs of inflation easing, aligns with the Fed’s recent decision to hold its benchmark rate steady, hinting at possible reductions later in the year.

Intel Faces Headwinds

Intel’s recent financial disclosure showed a deepening loss in its foundry business, a concern for traders. The shift to a foundry-based operation, despite significant funding under the CHIPS Act, has yet to yield the desired financial results, putting additional pressure on the stock.

Key Economic Data and Events

Traders are keeping an eye on upcoming economic reports, including the ADP private payrolls and the ISM services index. Speeches from Fed Chair Jerome Powell and other central bank figures will be closely analyzed for further insights into the monetary policy direction.

While the market faces a bearish phase this week, some analysts remain guardedly optimistic. The solid performance of the S&P 500 earlier in the year, alongside expectations of a Fed rate cut and decreasing inflation, suggest a potential rebound in equities in the near term.

In summary, while short-term market trends are leaning bearish, there’s potential for a shift in sentiment based on upcoming economic data and Fed policy directions.

Technical Analysis

Daily E-mini Nasdaq-100 Index

The E-mini Nasdaq-100 Index is lower on Wednesday, while hovering slightly above the 50-day moving average at 18184.36. Although the market successfully tested this moving average yesterday, it remains vulnerable to a near-term wash-out should this intermediate trend indicator fail as support.

Keep your eye on the 50-day moving average today. Trader reaction to this trend indicator will set the tone today.

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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