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The S&P 500 and Nasdaq 100 maintain the bullish momentum that the Fed is inciting despite weak GDP. why? -by Ecork

US stocks overview:

  • The S&P 500 and Nasdaq 100 rose for the second day in a row despite negative GDP data
  • Bets that the Federal Reserve will soon switch to less aggressive monetary policy amid a deepening recession risk fueling optimism on Wall Street
  • All eyes will be on the core June PCE report, which will be released on Friday

Most Read: The Federal Reserve raised interest rates by 75 basis points in July at the Federal Open Market Committee to fight inflation

After suffering heavy losses in early trading, US stocks recorded sharp reversals during the day and managed to extend them Rise due to the Federal Reserve from the previous session, gaining for the second day in a row despite disappointing economic data, such as the latest GDP report.

At the market close, the S&P 500 rose 1.21% to 4,072, its best level since June 9, buoyed by a strong rebound in Microsoft and Tesla shares. The Nasdaq 100, for its part, erased a 1.5% decline and rose 0.92% to 12,718, boosted by lower Treasuries, with the 10-year yield briefly dropping to 2.65%, its lowest reading since mid-April.

Sentiment remained optimistic on Wall Street after the Fed issued no new shells at the conclusion of Wednesday’s Federal Open Market Committee meeting and said unusually large gains would depend on future data, a sign that policy makers can Slow down the pace of future price increases.

On the economic front, the US gross domestic product recorded an additional contraction in the second quarter, declining 0.9% year-on-year after a 1.6% decline in the first three months of the year. While the deteriorating growth profile is no cause for celebration, investors speculate that Bad news can be good news Meaning, the deflation could prompt the US central bank to adopt a less hawkish stance sooner than expected, a scenario that could support a sustainable recovery in risky assets.

The bullish tone was later reinforced after US Treasury Secretary Janet Yellen made positive comments about the outlook, saying the economy remains resilient and the labor market is strong, helping to ease fears of an impending recession.

Looking ahead, earnings season will continue to attract the most attention as investors look for clues about the impact of high inflation, slowing demand and tightening financial conditions on US companies. On Friday, however, all eyes will be on the core PCE report, the Fed’s preferred inflation measure (we see this indicator rising by 0.5% m/m and 4.7% y/y). For market sentiment to improve further, the data should show a significant moderation in price growth, but that is unlikely to happen until later this summer.

S&P 500 تقني Technical Chart

After a strong day on Thursday, the S&P 500 managed to break through a key cap near 4,065, a move that allowed prices to climb to the highest level since June 9. To launch an attack on area 4160/4175, the next technical barrier in play. For more strength, focus shifts to direct resistance near the psychological level of 4300. On the other hand, if sellers return to fade the recent rally, initial support appears at 4065, followed by 3920. If both floors are nullified, a pullback towards 3815 should not be ruled out.

S&P 500 تقني Technical Chart

S&P 500 Technical Chart Created Using TradingView

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