Tech Sector Resurgence Propels Dow and S&P 500

Last week, Wall Street experienced losses as a result of rising apprehensions about stronger-than-expected economic data. The technology sector faced challenges due to the disproportionate impact of rising U.S. bond yields on many of the sector's highly valued stocks. This fueled worries about persistent inflation and the likelihood of interest rates remaining elevated for an extended period.

On Monday, U.S. stocks ended the day on a positive note, with major indices rising, largely due to Tesla Inc's gains. Simultaneously, the U.S. dollar weakened as investors awaited Wednesday's inflation data.

The stock market's performance was led by sectors like Consumer Goods, Telecoms, and Consumer Services, pushing stock prices higher. This optimism stemmed from hopes that the Federal Reserve would maintain its current interest rates, signaling a potential end to the period of interest rate hikes.

While Fed officials have suggested a possible pause in September, they have emphasized that future rate hikes will depend on economic data. Recent data has indicated a slowdown in inflationary pressures and labor market tightness.

On Monday, the Dow and S&P 500 recorded gains, thanks to robust showings by major tech firms. Investors displayed optimism ahead of Apple's iPhone 15 launch and the impending release of inflation data. Both the S&P 500 and the Dow rose by 0.7% and 0.3%, respectively, setting the stage for a week marked by significant economic data, with a key focus on Wednesday's consumer prices report (CPI).

The Nasdaq Composite Index experienced notable increases, climbing by 1.1%, with Tesla and Amazon.com playing a predominant role in this growth. Tesla's notable rise was driven by positive sentiment related to artificial intelligence. Additionally, Tesla's stock registered a 6.4% upturn subsequent to an upgrade from Morgan Stanley, which emphasized the advantages of the firm's autonomous technology.

Anticipations of inflation levels for August are projected to be elevated, primarily influenced by the increase in oil prices. Meanwhile, it is anticipated that the core inflation measure will show a decrease on a year-over-year basis.

A survey conducted by the New York Federal Reserve in August indicated that Americans' overall perceptions of inflation remained largely unchanged. They anticipated increased costs for housing and food, while expressing concerns about their own financial well-being.

This week, the focus remains on economic indicators, including retail sales for August, the NFIB small business optimism reading, and financial updates from companies like Oracle, Adobe, and Alibaba.

In summary, the U.S. stock market is navigating a complex landscape. While certain sectors, notably Consumer Goods, Telecoms, and Consumer Services, are showing promise, the broader outlook calls for cautious optimism with a tempered expectation of significant upward trends. The interaction among multiple elements, encompassing inflation, interest rates, oil prices, and economic data, will persist in constraining market dynamics in the near future.

Data for Technical Analysis (5H) CFD US 500 [S&P 500]

Resistance : 4484.1, 4485.8, 4488.7

Support : 4478.3, 4476.6, 4473.7                    

5H Outlook

Source: Investing.com

Buy/Long 1 If the support at the price range 4468.3 - 4478.3 is touched, but the support at 4478.3 cannot be broken, the TP may be set around 4484.4 and the SL around 4463.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 4484.1 - 4494.1, TP may be set around 4500.0 and SL around 4473.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 4484.1 - 4494.1 is touched, but the resistance at 4484.1 cannot be broken, the TP may be set around 4476.9 and the SL around 4499.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 4468.3 - 4478.3, TP may be set around 4460.0 and SL around 4489.0, or up to the risk appetite.       

Pivot Points Sep 12, 2023 03:18AM GMT

Sources: Investing 1, Investing 2