Tech Propels U.S. Stocks Higher Amid Anticipation of Economic Data

U.S. stock markets closed higher on Monday, buoyed by gains in the Technology, Consumer Services, and Basic Materials sectors. While weakness in banks was observed, the demand for tech stocks rebounded, particularly in the case of Nvidia (NASDAQ:NVDA), which surged ahead of forthcoming economic data that will shed light on consumer trends.

Both the S&P 500 and the Nasdaq experienced upward movement, driven by Nvidia's significant surge following a favorable note from Morgan Stanley. This surge in Nvidia's stock price also contributed to gains in other large-cap growth stocks and propelled the information technology index up by 1.85%, positioning it as the strongest performer among the S&P 500 sector indexes.

During Monday's after-hours trading, U.S. stock futures showed little change following a positive trading session earlier in the day. Major tech companies like NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL) posted notable gains as investors seized the opportunity to buy into the market after a recent dip, motivated by last week's decline.

The recent decline in the tech sector attracted investors looking to capitalize on the opportunity, especially in semiconductor stocks. Nvidia's impressive climb of over 7% was fueled by Morgan Stanley's endorsement of the buying opportunity presented by the dip. Despite concerns about chip inventory and demand due to China's economic challenges, Morgan Stanley predicts a rise in demand for AI that will drive data center spending and further enhance Nvidia's growth.

Despite these positive developments, global market sentiment remained restrained due to concerns about China's highly leveraged property sector. The decision of China's top private property developer, Country Garden, to delay bond payments heightened unease. This uncertainty led to a surge in the U.S. dollar as investors sought refuge from apprehensions surrounding China's economy.

Looking ahead, the focus in the market this week will center on the quarterly earnings reports of major U.S. retailers, including Walmart (NYSE:WMT) and Target. Of note is the upcoming economic data on July retail sales, which will shape expectations regarding U.S. interest rates. The market anticipates a positive report driven by potential higher spending attributed to Amazon (NASDAQ:AMZN)'s Prime Day, and major U.S. retail giants are also scheduled to release their quarterly reports.

A robust spending report could challenge the prevailing outlook for U.S. interest rates, potentially impacting the Federal Reserve's stance on inflation. The market has already priced in a significant number of rate cuts for the upcoming year, starting around March. Economic data releases, such as Chinese industrial output and consumer spending, as well as minutes from the latest U.S. Federal Reserve meeting and British inflation figures, will be closely watched by investors throughout the week. As a result, the overall US stock market may experience fluctuations within the given timeframe, and the expected upward trend is projected to have limitations.

Data for Technical Analysis (5H) CFD US30 DJIA

Resistance : 35341.2, 35371.2, 35419.6

Support : 35244.4, 35214.4, 35166.0                            

5H Outlook

Source: Investing.com                          

Buy/Long 1 If the support at the price range 35204.4 - 35244.4 is touched, but the support at 35244.4 cannot be broken, the TP may be set around 35375.5 and the SL around 35190.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 35341.2 - 35381.2, TP may be set around 35430.0 and SL around 35230.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 35341.2 - 35381.2 is touched, but the resistance at 35341.2 cannot be broken, the TP may be set around 35244.4 and the SL around 35395.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 35204.4 - 35244.4, TP may be set around 35155.0 and SL around 35356.0, or up to the risk appetite.       

Pivot Points Aug 15, 2023 02:30AM GMT

Sources: Investing 1, Investing 2