Nasdaq Index, Dow Jones, S&P 500 News: Rising Yields, Waller’s Influence Set the Tone

Key Points

• Rising rates and earnings reports impact the market.
• Fed’s Waller influence and earnings snapshot are crucial.
• A surge in interest rates raises economic uncertainty.
• Investors nervous ahead of Wednesday’s retails sales data. 

Bearish Short-Term Forecast Amidst Economic Uncertainties

Major U.S. stock indexes opened lower on Tuesday, with rising interest rates and fourth-quarter earnings reports taking center stage. Investors kept a close watch on the Fed speakers and the American consumer, seeking insights into the economic landscape.

Fed Speaker’s Influence on the Market

Anticipation surrounded central bank speakers, notably the Fed’s Christopher Waller, scheduled to speak at 16:00 GMT. Waller’s prior dovish stance hinted at a market-friendly tone, potentially impacting the dollar negatively. Should he reaffirm the message of successful disinflation, it may briefly boost riskier assets like stocks. However, any unexpected hawkishness could trigger a sharp downturn.

Interest Rates and Global Outlook

The 10-year Treasury note yield surged beyond 4%, propelled by European central bank officials playing down rate cut expectations. Despite progress in interest rate tightening, caution looms. The upcoming December retail sales data on Wednesday holds significance, as a slowdown in U.S. consumer spending could stoke recessionary concerns and economic growth worries.

Earnings Snapshot

Major banks unveiled their quarterly results. Goldman Sachs exceeded profit and revenue expectations, lifting its stock. In contrast, Morgan Stanley’s earnings fell short, causing a dip in its shares.

Tesla’s Voting Control Move and Uber’s Strategic Shift

Tesla faced a drop as CEO Elon Musk aimed to secure 25% of voting control, raising concerns about his divided focus due to ventures like SpaceX. Meanwhile, Uber decided to close its alcohol delivery service, Drizly, aligning with its core focus on Uber Eats, leading to a stock rise.

New York Fed Manufacturing Survey

Manufacturing activity in the New York region hit its lowest level since May 2020, indicating challenges in new orders and shipments. However, the six-month outlook showed improvement, supporting expectations of a March Fed rate cut.

Short-Term Forecast

In this uncertain landscape, the short-term forecast leans bearish, marked by rising interest rates and potential market volatility. Investors await December retail sales data with vigilance, watching for signs of a cooling U.S. consumer spending trend that could impact economic growth and raise recession concerns.

Technical Analysis

After several days of consolidation, the E-mini Dow Jones Industrial Average futures contract finally looks like it is ready to expand the range to the downside. The move is not necessarily a trend changing event, but position adjusting by those investors who bet on a Fed rate cut in March. With growing uncertainty about an early rate cut, investors are leaving the market with the hopes at re-entering at more favorable price levels like the support cluster formed by the 50-day moving average and the minor support at 36565 to 36450.