Nasdaq Index: Record Highs Follow Cooler PCE and Iran Ceasefire Talk

Nasdaq Hits Record as Ceasefire Talk and Cooler PCE Collide

The Nasdaq Composite Index (IXIC) rallied to an intraday record at 26861.59 on Thursday. The S&P 500 gained roughly 0.5%. Dow Jones Industrial Average stayed near record territory but traded mostly flat.

Two things landed at the same time and both pointed higher. Axios reported that U.S. and Iranian negotiators agreed to a 60-day memorandum of understanding tied to continued nuclear talks.

Then the April Personal Consumption Expenditures index came in at 0.4% monthly against expectations of 0.5%. A ceasefire headline and a softer inflation number on the same morning. That is why the Nasdaq is at all-time highs.

Is Oil Still the Biggest Risk to This Rally?

Iran’s Revolutionary Guard targeted a U.S. airbase Thursday after additional American strikes inside Iran. West Texas Intermediate crude oil futures pushed above $89 a barrel. Spot Brent crude oil traded near $95. That was the early session. Then the ceasefire headlines hit and crude pulled back.

The reversal in oil is doing the heavy lifting for stocks right now. Lower crude takes the edge off the inflation story at exactly the moment the Personal Consumption Expenditures data is showing the first sign of cooling. But the White House denied that a finalized memorandum of understanding exists. Called the reports inaccurate. The ceasefire is not done. It is a 60-day framework that still needs President Donald Trump’s final approval. One headline from Tehran or one more military strike and oil is back above $90 and this whole rally is in question again.

Did the PCE Just Give the Fed an Exit?

The headline Personal Consumption Expenditures index held at 3.8% year-over-year. That is still well above the Federal Reserve’s 2% target. But the monthly number at 0.4% came in below the 0.5% economists expected. After several stubborn months of hot prints that is the first reading that did not get worse.

The number is not soft enough to change Federal Reserve policy. Nobody is pricing rate cuts off one print. But it stopped the bleeding. Technology and growth stocks took it as permission to bid because even a small crack in the inflation data opens the door to eventual easing. Information technology and health care led the S&P 500 during the session. The market is not trading what the Fed will do tomorrow. It is trading whether the worst case just got less likely.

Why Are Investors Still Bearish at Record Highs?

The American Association of Individual Investors survey shows bearish sentiment above its long-term average for a 16th straight week. Roughly 41.9% of investors call themselves bearish over the next six months. The historical average is 31%. Bullish sentiment ticked up but stayed below average.

Record highs and persistent bearish positioning is a disconnect that matters. Market breadth stayed mixed during the session. Roughly half of the S&P 500 traded higher. Gains concentrated in technology and health care, not spread across the board. That narrow leadership is what keeps retail investors skeptical. But skepticism with cash on the sidelines is also fuel. Money waiting to enter the market has to go somewhere if the rally keeps running.

Snowflake surging 35% on stronger-than-expected guidance and a long-term Amazon Web Services spending deal is the kind of catalyst that pulls sidelined capital back in. When one cloud name prints like that the entire software group moves and Thursday proved it.

Daily Nasdaq Composite Index (IXIC) Technical Analysis

The Nasdaq Composite (IXIC) reaffirmed its uptrend on Thursday with an intraday rally to 26861.59. There is no resistance at current levels although the pace of the rally appears to be slowing. Nonetheless, we’re not looking for a specific area to end the rally, but rather a chart pattern, like a closing price reversal top, that signals the selling may be greater than the buying at current price levels.

The current short-term range is 25701.44 to 26861.59. Its trailing 50% level is 26281.52. This price is both potential support and a trigger point for an acceleration to the downside.

The nearest support is the swing bottom at 25701.44. A trade through this level will change the main trend to down according to the swing chart. This could open the door to further downside pressure, putting the 50-day moving average in play at 24190.95.

Can the Ceasefire Hold Long Enough?

Two things broke right on the same day and the Nasdaq Composite Index hit a record because of it. The 60-day ceasefire framework pulled crude oil lower. The Personal Consumption Expenditures index printed cooler than expected. Neither one alone gets the Nasdaq to all-time highs. Both together did. The risk is that only one of them has to fail for this rally to stall. The White House already denied the memorandum reports. One phone call from Tehran or one more military strike reverses the oil move and the inflation relief disappears with it.

The 50% level at 26281.52 is the line to watch on any reversal. Below that and selling accelerates toward 25701.44 where the trend changes. But 41.9% bearish sentiment for 16 straight weeks means cash is heavy on the sidelines. That money has to go somewhere. A pullback to support with this much skepticism in the survey is more likely to attract buyers than break the market.

More Information in our Economic Calendar.