Nasdaq 100, S&P 500, inflation – talking points
- S&P 500 makes slight gains, stays under pressure below 4000
- Nasdaq 100 index hovering around 12,000 as macro concerns remain in focus
Stocks continue to fall in the wake of yesterday’s CPI report, with the S&P 500 and Nasdaq 100 erasing gains made early in the New York session. Risks have come under a lot of pressure lately, as a slew of macro concerns weighed on investor sentiment. Wednesday’s session was particularly interesting, as there was wild volatility after the highly anticipated CPI data was released, with stocks eventually relaying lower throughout the day. Markets may be at a crossroads, as Wednesday’s data did little to answer any questions about “peak inflation.”
For starters, CPI printing is just one data point. Market participants and Federal Reserve officials will need more data to know if inflation is so truly Rolling over. However, although the reading beat expectations on both the year and last year’s metrics, the CPI was lower in April than it was in March. Perhaps we can sum up yesterday’s data set as a mixed bag. Risk-taking may largely reflect that sentiment, with the S&P 500 teetering on the verge of a bear market.
With many technology stocks faltered by the recent hike in interest rates, the Nasdaq 100 is still in great pain. Thursday’s session saw the index trade below the 12000 level for the first time since November 2020. There could be more pain as the stock markets are yet to show any sign of that. TRUE surrender. However, this morning NQ rose to the previous support level at 12129. This rally has faded sharply, and it is a true sign of the “bull sell” environment we found ourselves in. Bulls will want to see session lows at 11693.25 to wait, but the break could trigger a flow to new yearly lows.
Nasdaq 100 futures index (NQ) 1 hour chart
Chart created with TradingView
The S&P 500 has also received significant internal scrutiny recently, as the heavy weights of technology within the index continue to drag the benchmark lower. To put these weights in context, Apple alone makes up roughly 6% of the index, while the entire energy sector accounts for 4%. Just like the NQ, the S&P 500 fails again at previous support, where that level was 3,960. With all the risks still looking very heavy, the S&P 500 could find itself slipping near a key area around 3800. The 3802 represents the 0.618 Fibonacci retracement of the move from March 2020 bottomed to an all-time high. Investors may be looking to put some dry powder to work in that area, but if this area fails too, we could be waiting for some serious pain.
1 hour S&P 500 futures (ES) chart
Chart created with TradingView
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— written by Brendan Fagan, Trainee
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