U.S. Indices Forecast: Dow Jones Stalls & Nasdaq 100 Consolidates; What’s Next for the S&P?

U.S. stock indexes have notched some decent gains in the past 5 days as the market prepares for Thursday’s inflation data.

The consensus estimate for the annual CPI currently sits at 2.9%, which translates into a 2.7% jump compared to last month’s figure.

Investors have responded positively to Chairman Jerome Powell’s confirmation that the Federal Reserve is ready to make its first interest rate cut of the year.

FOMC Meeting Outcome Survey (September 17) – Source: FedWatch

Nick Eastham, Premium Client Manager at Spreadex, commented:

The market’s current optimism is built on a delicate assumption that inflation continues to ease just as the Fed delivers two rate cuts, while corporate earnings extend their nine-quarter streak of growth. It’s a neat story, but one that leaves little room for disappointment. With so much of the bullish outcome already priced in, any deviation from this script could trigger sharp moves.}

What stands out is the breadth of positioning. Investors are piling into equities, but they’re also buying bonds and gold. It’s rare to see such enthusiasm across both risk-on and risk-off assets at the same time. Far from signalling confidence, it hints at caution – an underlying anxiety that monetary easing could either fuel overheating or fall short of supporting the economy. That uncertainty is echoed in Spreadex’s own data, where just 47% of clients with open S&P positions are net long, underscoring how evenly split sentiment remains.

For the S&P 500, momentum still points higher, but it relies on perfect alignment: softer CPI data, timely Fed action, and continued earnings strength. The divergence among indices highlights just how finely balanced conditions are, yet it is precisely in these moments of tension that short-term trading opportunities often emerge.

The majority of analysts surveyed by FedWatch, 92% to be precise, believe that the first 25 basis points cut will be implemented during the next FOMC meeting on September 17. Meanwhile, more than 70% think that a second cut of the same magnitude will be executed in October.

On the earnings side, data from FactSet indicates that analysts expect a 7.5% year-on-year increase in corporate profits during the third quarter of this year. If that’s the case, this would be the ninth consecutive quarter of positive bottom-line performance for companies in the S&P 500 index.

Since the year started, this key stock market benchmark has booked a 10.8% gain while the Nasdaq 100 index and the Dow Jones Industrial Average have experienced a 13.5% and 7.6% increase respectively during this same period.

Let’s have a look at the latest hourly price action of these three stock market indexes to see where they may be headed as the third quarter is about to come to an end.

S&P 500 Index Finds Support at 6,475

The S&P 500 index bounced strongly off its early September lows of 6,360 and broke above the 6,475 resistance with enough strength to push through and make a new all-time high.

S&P 500 Index 1H Chart – Source: TradingView

This previous area of supply has now become the key support to watch as positive momentum keeps rising. The Relative Strength Index (RSI) in the hourly chart shows signs of consolidation following this bullish breakout as the market waits for this week’s inflation data before making its next move.

Not much seems to be getting in the way of the S&P 500 to make a new ATH in the next few days. However, if inflation data comes in hotter than expected, that could result in a big drop as it could prompt the Fed to rethink its approach.

DJIA Could Drop to 45,000 After Making a Double Top

Moving to the Dow Jones Industrial Average we can see a trend line break, followed by a retest of the index’s all-time high at around 45,770, and a subsequent decline.

Dow Jones Industrial Average 1H Chart – Source: TradingView

This blue-chip index is now retesting its former support from below and, depending on how the price action behaves from this point forward, we could either expect a pullback to the 45,000 level or a blow-off-the-top move toward 46,000 next.

The selling pressure once the DJIA got to 45,770 was strong, but not strong enough to cause a major drop. Hence, this latest retreat may have been the result of a take-profit move from early buyers who cashed out after the index rose to this level for a second time. As long as the 45,000 holds, the rally should continue.

Nasdaq 100 Bounced Strongly Off 23,000

As for the Nasdaq, a double-bottom pattern emerged as the index touched the 23,000 level and bounced strongly off that mark a week ago.

Nasdaq 100 Index 1H Chart – Source: TradingView

The price was propelled to its current level of 23,812 for a 3.5% gain in a relatively brief period after encountering some selling pressure at 23,850.

If we get another rejection of a move above 24,000, this could set the stage for a pullback and confirm that the Nasdaq has entered a period of consolidation ahead of key economic data like inflation, interest rates, and earnings.

The RSI sent a sell signal in this lower time frame after crossing below the 14-period moving average even though the price has hit the 23,850 area once again. Failing to break out of this level and toward that psychological threshold of 24,000 would confirm a bearish outlook for the next few days.