NASDAQ Index, SP500, Dow Jones Forecasts – Stocks Soar On Fed Rate Cut Bets

SP500

SP500 rallied as traders reacted to the CPI report. The report indicated that Inflation Rate remained unchanged at 2.7% in July, while analysts expected that it would rise to 2.8%. Core Inflation Rate increased from 2.9% in June to 3.1% in July, compared to analyst consensus of 3%. The yield of 2-year Treasuries pulled back below the 3.75% level as bond traders bet on dovish Fed. Meanwhile, the yield of 10-year Treasuries climbed towards the 4.30% level. Rising longer-term Treasury yields show that market believes that Fed rate cuts will ultimately boost inflation and force the central bank to raise rates again. It should be noted that stock traders are not worried about long-term rate outlook and focus on the potential rate cut at the next Fed meeting.

Currently, SP500 is trying to settle above the resistance at 6430 – 6440. In case this attempt is successful, SP500 will move towards the 6500 level. RSI is close to the overbought territory, but there is enough room to gain additional upside momentum in the near term.

NASDAQ

NASDAQ tested historic highs as traders focused on inflation data. Traders bet that Fed will be forced to cut rates due to weak Non Farm Payrolls data and lower-than-expected inflation report.

A move above the resistance at 23,700 – 23,750 opens the way to the test of the 24,000 level.

Dow Jones

Dow Jones moved towards the resistance level at 44,500 – 44,600 amid broad rally in the equity markets.

If Dow Jones manages to settle above 44,600, it will head towards the next resistance, which is located near July highs in the 45,000 – 45,100 range. RSI is in the moderate territory, and there is plenty of room to gain momentum in case the right catalysts emerge.

For a look at all of today’s economic events, check out our economic calendar.