Nasdaq Index, Dow Jones, S&P 500 News: Fed Concerns Weigh on Market Sentiment

James Hyerczyk
Updated: May 26, 2024, 13:07 GMT+00:00

Key Points:

  • Stock futures show modest gains following a tough session for the Dow Jones.
  • Despite Nvidia's 9% surge, over 400 S&P 500 stocks close lower on Thursday.
  • Strong economic data tempers hopes for imminent Federal Reserve rate cuts.
Dow Jones, Nasdaq-100, S&P 500 Index

In this article:

Stock Futures Edge Higher After Dow’s Worst Session in Over a Year

Stock futures showed slight gains on Friday, following a tumultuous session on Thursday where the Dow Jones Industrial Average experienced its worst performance in over a year.

At 12:09 GMT, Dow Futures are trading 39208.00, up 55.00 or +0.14%. S&P 500 Index Futures are at 5301.75, up 16.50 or +0.31% and Nasdaq Futures are trading 18759.00, up 62.75 or +0.34%.

Nvidia’s Surge Amid Market Downturn

On Thursday, chipmaker Nvidia saw its stock soar by more than 9%, driven by strong earnings, an upbeat guidance, and a 10-for-1 stock split. Nvidia, now a key indicator for the broader market and a leader among the “Magnificent Seven,” couldn’t buoy the overall market. Despite Nvidia’s impressive performance, over 400 stocks in the S&P 500 closed lower. The S&P 500 fell by 0.74%, the Nasdaq Composite dropped 0.39%, and the Dow plummeted 1.53%, marking its worst session since March 2023, largely due to a 7.6% decline in Boeing shares.

Fed Minutes and Economic Data Impact

Jamie Cox, managing partner at Harris Financial Group, noted that markets often slow down ahead of long holiday weekends. He pointed out that the Fed’s minutes served as a catalyst for the downturn, with Nvidia’s gains unable to shift the focus back to positive sentiments. The Fed’s latest meeting minutes revealed concerns over slow progress in controlling inflation. Additionally, robust economic data on Thursday dampened hopes for imminent rate cuts from the Federal Reserve. May’s services and manufacturing data exceeded expectations, and initial jobless claims for the week ending May 18 were lower than forecasted, coming in at 215,000 versus the expected 220,000.

Weekly Market Performance

The S&P 500 is on track for a weekly loss of 0.7%, while the Dow is expected to fall by approximately 2.4%. The Nasdaq, however, is set for a modest weekly gain of 0.3%. The Dow is poised to end a five-week winning streak, and the S&P 500 is likely to break a four-week positive run, as concerns over the Fed’s rate cut decisions overshadow Nvidia’s positive report. Following strong economic and labor data this week, Goldman Sachs has pushed its forecast for the Fed’s first rate cut to September from July. Goldman economist David Mericle noted that while inflation might improve by September, it would still be high enough to make rate cuts a complex decision.

Focus on Upcoming Data

On Friday, traders will be closely monitoring April’s durable goods report and May’s University of Michigan consumer sentiment index for further insights into the economic outlook.

Market Forecast

Given the current economic indicators and Fed concerns, a cautious approach is advisable. While Nvidia’s performance highlights potential in specific sectors, overall market sentiment may remain bearish until clearer signals of inflation control and rate cut timings emerge. Traders should stay informed on upcoming economic data releases to better navigate the market conditions.

Technical Analysis

Daily E-mini S&P 500 Index

E-mini S&P 500 Index futures are trying to clawback yesterday’s loss shortly before the cash market opening. Nonetheless, the market is in a position to post a weekly closing price reversal top. If this chart pattern is confirmed next week then look for the start of a 2 to 3 week correction.

On the daily chart, if the current shift in momentum continues then look for the selling to possibly extend into the 50-day moving average at 5211.66.

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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