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Rising Yields Turn Stocks Lower
Following the correction lower from YTD highs, the Nasdaq continues to hug support at the 14544.9 level today. The uptick in USD and US yields over the last two weeks has been a major downside catalyst for risk sentiment, with tech stocks falling sharply. The Fed is now widely expected to hike rates at least once more in the current cycle with rates then expected to stay at elevated levels for longer than first thought. The market has been busy repricing its rates view for the US with expected rate cuts now being pushed back well into the second half of 2024 in line with the Fed’s own signals.
US Econ Data Key
Resilience in the US economy has been a major driver behind the shift in outlook from the Fed. With August employment and retail sales both seen coming in well above forecasts and with inflation seen moving higher also, the Fed has very little reason to cease its current tightening campaign. As such, incoming US data over today and tomorrow will be closely watched and holds the potential to drive stocks lower still if further strength is seen. USD received a fresh boost yesterday with durable goods coming in above forecasts, reinforcing the hawkish Fed narrative.
Technical Views
Nasdaq
The correction lower from YTD highs around the 16010-mark has seen the market trading back down to the 14544.9 level. Price is now testing this level a second time, along with the bull channel lows. This is a key area for bulls to defend with a break here seen opening the way for a move down to 13782.3 next, in line with bearish momentum studies.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.