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US inflation data makes or breaks market spirit -by Ecork

US stocks overview:

  • The Nasdaq 100 Index jumps 1.30%, outperforming its peers on Wall Street
  • The S&P 500 gains 0.3%, while the Dow Jones is down 0.26%.
  • Wednesday’s US inflation data will set the mood and tone on Wall Street in the coming days

Most Read: S&P 500, Nasdaq 100, Dow Jones forecast – mercy bounce from big support

After a brutal landing at the beginning of the weekThe stock market stabilized and found a foothold on Tuesday, allowing stocks to make a modest rebound ahead of key US economic data on Wednesday. After all the twists and turns, the S&P 500 rose 0.25% to 4,001 in a highly volatile session that saw the index move between positive and negative territory multiple times. For its part, the Nasdaq 100 index jumped 1.30% to 12,345 points Plunging buyers appeared to pick up cheap technology stocks after Huge defeat seen within the past five weeks. Last but not least, the Dow Jones underperformed its peers and fell 0.26%, ending the day at 32.160, its lowest closing level since March 2021.

Although selling activity has subsided somewhat, sentiment remains fragile and risk appetite is almost non-existent due to growing concerns that the US economy is heading for trouble. Investors lose faith in the Fed’s ability to engineer a soft landing and start betting that the environment for higher interest rates needed to crush inflation will be so. pumpkin Economic activity, resulting in a recession The not-too-distant future. Whether these fears are justified or not, they exacerbate pessimism among merchantsLeadership With them Marches fade away frequently.

Looking ahead, all eyes will be on the latest CPI report due tomorrow morning (Wednesday). Whatever happens, the data is likely to set the tone for Wall Street in the coming days. As for consensus expectations, analysts polled by Bloomberg News expect the headline CPI for April to come in at 8.1% year over year, step down from 8.5% YoY registered Previous Month. The annual average for the basic scale is also Cooling was seen, moving from 6.5% p.a. to 6.1% y/y.

For the mood to improve and the bleeding to stop, the data must confirm this inflation peaked In March it is beginning to go down. if this story play it out, a strong Rally relief could be in the cards. On the contrary, if CPI results are above expectations and show that inflationary pressures remained largely unchecked during the relevant period, The turmoil could intensify in the near term on bets that policy makers must be bolder in reducing demand. to restore price stability. This scenario could lead to another brutal sell-off in stocks, especially in the tech space that is highly sensitive to price.

Nasdaq 100 technical analysis

After a sharp sell-off at the start of the week, the Nasdaq 100 fell below a key support level near 12210 on Monday, but the breakout did not last, with the index moving back above that level on Tuesday after a modest recovery. While this throwback is welcome, it doesn’t change the fact that The broader view is negative And that The indicator is in a vicious bear market.

Focusing on the following catalysts, the April CPI report is likely to lead to sharp moves among the most important stock benchmarks, so traders should pay attention to how the price action resolves for clues to the near-term direction. However, if we see a critical dip below 12,210 Continuing on the downside in the coming days, the bears could launch an attack on 11,600, followed by 11,000.

On the other hand, if the Nasdaq builds recovery on Tuesday and is charged with higher initial resistance Appears at 12,645. For more power, the focus moves to 13,000.

Nasdaq 100 chart created using TradingView

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— By Diego Coleman, Market Strategist and Contributor

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