Nasdaq Index, Dow Jones, S&P 500 News: Slowing GDP Fuels Expectations of Fed Easing

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Published: Dec 21, 2023, 15:16 GMT+00:00

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S&P 500 rallies as third-quarter GDP growth decelerates to 4.9%, but resilient job market indicators boost investor confidence.

In this article:

Highlights

Major indices rebound with significant gains
Economic growth slows, job market remains strong
Corporate earnings boost market confidence

Market Resurgence

The Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 are experiencing a rebound, marking a significant recovery from their worst performance since October. The Dow rose by 0.76%, and the Nasdaq Composite increased by 1.1%. The S&P 500 also gained, rising 0.83% and edging closer to record highs, following a strong rally since late October.

Economic Indicators

The U.S. economy’s growth showed a deceleration with the third-quarter real GDP increasing by 4.9%, below both the prior 5.2% estimate and the Dow Jones forecast of 5.1%. Meanwhile, initial jobless claims ticked slightly upward to 205,000 last week but remained lower than expected, suggesting resilience in the labor market.

Corporate Performance

Highlights In corporate news, Micron Technology’s shares surged over 7% post-earnings, while Carnival shares rose by 6% following a smaller-than-expected quarterly loss. Boeing’s stock also lifted by 1.8% amid positive news from China. CarMax shares jumped 7% after beating earnings expectations, and Salesforce was upgraded by Morgan Stanley, projecting a promising outlook for 2024.

Short-Term Market Outlook

Given the recent economic indicators, the stock market’s short-term forecast is bullish. The combination of weakening growth with a strong labor market aligns with the Federal Reserve’s objectives, suggesting an easing of aggressive rate hikes. This development reinforces the anticipation of a potential rate cut in the near future, which could further invigorate market optimism and sustain the current rally.

Technical Analysis

Daily E-mini S&P 500 Index

The E-mini S&P 500 Index is currently trading at 4782.00, which is significantly above both its 200-day and 50-day moving averages of 4451.61 and 4524.52, respectively. This positioning above the key moving averages indicates a bullish sentiment in the market. The index has surpassed the minor support level at 4562.50, further reinforcing the bullish trend. The next critical support is at 4494.00, which could serve as a strong base in case of any pullbacks.

The current price level of the E-mini S&P 500 Index, being well above these averages and key support levels, suggests a strong upward momentum. This trend is typically seen as positive by traders and could indicate continued bullish behavior in the near term, barring any significant market-changing events. The absence of defined minor or major resistance levels nearby provides room for potential upward movement, consolidating the bullish market sentiment.

Overall, the market’s current posture, with the E-mini S&P 500 Index trading well above important moving averages and support levels, points towards a continued positive outlook in the short term.

About the Author

James HyerczykSenior Analyst

James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.