Nasdaq 100 hits fresh highs as correction risks rise
Major US technology stocks have pushed higher today, maintaining their gains following Powell's press conference last night. Despite the Dow closing lower yesterday, tech-heavy indices like the Nasdaq 100 have continued to gain ground. The technology sector continues to drive market performance; without it, the stock markets would look significantly different. With technology shouldering much of the burden, the question arises as to how long this sector can support the market. While a correction is possible, the indices have not yet shown a clear topping pattern. For now, buying dips in tech-heavy indices appears to be a more prudent strategy than attempting to time the market top, despite growing concerns over valuations.
Tesla and Broadcom Provide Additional Boost
Several technology companies saw their shares surge at the open, including Tesla, after Elon Musk announced that shareholders had overwhelmingly voted to re-approve his compensation package and move the company’s state of incorporation to Texas. Another tech company, Broadcom, a chip supplier for Apple, reported results that exceeded estimates due to strong demand for artificial intelligence products.
Stocks March Higher Despite Macro Concerns
Today’s softer PPI data offers some relief, but the fight against inflation continues. At 3.4%, CPI inflation remains well above the Fed’s target, staying above 3% for the 38th consecutive month. Super core CPI, which includes core services inflation minus shelter, increased 5% year-over-year in May, its highest level since April last year. This makes the cost of living extremely high, especially considering that median US house prices are at an all-time high of $434,000 and GDP growth slowed to 1.3% in the first quarter. Additionally, there are no plans to address the nearly $35-trillion national debt and rising deficits.
Fed Signals One More Rate Cut, but Markets Want More
The Federal Reserve reduced expectations for interest-rate cuts this year, though Chair Jerome Powell left open the possibility for more cuts, emphasizing that the new forecasts were conservative. Policymakers' updated economic projections now indicate they expect to lower borrowing costs only once in 2024, down from the three reductions previously anticipated. Despite positive consumer price data released yesterday, they also raised their inflation forecasts. This cautious stance, however, did little to deter bond traders, who continued to bet on rate cuts.
Written by Fawad Razaqzada, market analyst at FOREX.com
Follow me on twitter: https://x.com/Trader_F_R
Tesla and Broadcom Provide Additional Boost
Several technology companies saw their shares surge at the open, including Tesla, after Elon Musk announced that shareholders had overwhelmingly voted to re-approve his compensation package and move the company’s state of incorporation to Texas. Another tech company, Broadcom, a chip supplier for Apple, reported results that exceeded estimates due to strong demand for artificial intelligence products.
Stocks March Higher Despite Macro Concerns
Today’s softer PPI data offers some relief, but the fight against inflation continues. At 3.4%, CPI inflation remains well above the Fed’s target, staying above 3% for the 38th consecutive month. Super core CPI, which includes core services inflation minus shelter, increased 5% year-over-year in May, its highest level since April last year. This makes the cost of living extremely high, especially considering that median US house prices are at an all-time high of $434,000 and GDP growth slowed to 1.3% in the first quarter. Additionally, there are no plans to address the nearly $35-trillion national debt and rising deficits.
Fed Signals One More Rate Cut, but Markets Want More
The Federal Reserve reduced expectations for interest-rate cuts this year, though Chair Jerome Powell left open the possibility for more cuts, emphasizing that the new forecasts were conservative. Policymakers' updated economic projections now indicate they expect to lower borrowing costs only once in 2024, down from the three reductions previously anticipated. Despite positive consumer price data released yesterday, they also raised their inflation forecasts. This cautious stance, however, did little to deter bond traders, who continued to bet on rate cuts.
Written by Fawad Razaqzada, market analyst at FOREX.com
Follow me on twitter: https://x.com/Trader_F_R
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