Nasdaq Index, Dow Jones, S&P 500 News: Bracing for Powell’s Speech Amidst Rate Cut Rumors

Highlights

• Dow Rises, S&P 500 and Nasdaq Fall Ahead of Powell Speech
• Fed Member Comments Trigger Speculation on Interest Rate Cuts
• Dollar Weakens, Bond Yields Drop as Market Awaits Powell Comments

Mixed Market Performance Ahead of Powell’s Comments

The U.S. stock market is exhibiting a mixed response in early trading, with the Dow Jones Industrial Average slightly up by 0.12%, while the S&P 500 and Nasdaq-100 are down by 0.09% and 0.37%, respectively. Investors appear cautious, adjusting positions ahead of Federal Reserve Chair Jerome Powell’s upcoming speech at 16:00 GMT, which may hint at future interest rate directions.

Fed’s Stance and Market Expectations

The Federal Reserve is entering a blackout period before its December 14 announcement, making Powell’s speech at Spelman College a critical moment for market guidance. Despite recent statements about maintaining high interest rates through 2024, market sentiment is shifting.

Inflation indicators, such as the October PCE price index, have shown easing trends, complicating the Fed’s messaging. Additionally, comments from policymaker Christopher Waller about potential rate cuts have fueled market speculation, with the CME’s FedWatch tool indicating a significant probability of a rate cut by May 2023.

Bond Yields and Dollar Impact

This week witnessed a notable drop in bond yields, with the U.S. 2-year yield decreasing by 27 basis points and the 10-year yield hitting a 2-1/2 month low. Concurrently, the dollar index weakened, reaching its lowest since August 11, influenced by these market shifts and November’s robust equity market performance.

Corporate Highlights and Disney’s Dividend Reinstatement

In corporate news, Elastic N.V. saw a surge in stock value following an analyst upgrade, while Walt Disney announced the reinstatement of its dividend, reflecting strategic progress and renewed focus on long-term growth. However, Alibaba experienced a decline after a downgrade from Morgan Stanley.

Outlook and Market Caution

Despite the upbeat market sentiment in November, some analysts advise caution. Wells Fargo’s Chris Harvey suggests a potential pullback or correction as 2024 approaches, citing an overbought market and uncertainty around rate cuts. The overall market outlook remains cautiously optimistic but tempered by the looming Fed announcements and mixed economic signals.

Technical Analysis

The E-mini Nasdaq-100 Index is currently exhibiting a cautiously optimistic trend.

The current daily price of 15916.75, although slightly lower than the previous close of 15985.50, remains above both the 200-day and 50-day moving averages, at 14436.10 and 15227.38 respectively. This positioning above key moving averages typically indicates a bullish sentiment.

However, the proximity of the price to the minor support level at 15717.75 requires vigilance, as a breach below this point could shift the market sentiment.

With no significant minor or main resistance levels in immediate range, the path for upward movement seems less obstructed, potentially leading to continued bullish behavior unless the support levels are compromised.