Tech Strength Amidst Oil Price Drop and Fed Rate Cut Expectations

Global stock indexes experienced positive momentum on Monday, driven by a more than 2% surge in the Nasdaq, primarily fueled by gains in U.S. tech-related shares. However, U.S. oil prices faced a 4% drop due to Saudi Arabia's price cuts, overshadowing tensions in the Middle East. Despite a slight drop in U.S. stock futures on Monday night, major tech companies' strong performances during the regular session contributed to higher U.S. stock values, particularly in the Technology, Consumer Services, and Consumer Goods sectors.

Investors braced for the release of crucial inflation data later in the week, which could influence the Federal Reserve's approach to potential interest rate cuts in 2024. The year began with a rocky start in equity markets, as investors opted to take profits following a substantial rally in the last two months of 2023. Additionally, concerns ahead of the Q4 earnings season, commencing later in the week, added to the cautious market sentiment.

On the positive side, the Nasdaq recorded its first gain of at least 1% in 2024, supported by a fall in Treasury yields that boosted mega-cap stocks. Amazon.com and Alphabet closed up 2.66% and 2.29%, respectively. Apple saw a 2.42% climb after announcing the availability of its Vision Pro mixed-reality device from Feb. 2 in the United States. Chipmakers Nvidia and Advanced Micro Devices also surged, lifting the Philadelphia SE Semiconductor Index by 3.28%.

Boeing shares experienced an 8.03% plunge after the company and U.S. regulators permitted airlines to inspect grounded jets following a dangerous mid-air fuselage breach on an Alaska Airlines-operated 737 MAX 9 over the weekend. This decline limited gains in the Dow Jones industrial average.

The S&P 500 and Nasdaq posted their first daily percentage climbs of more than 1% since Dec. 21, marking the most significant one-day percentage advances since Nov. 14. However, the S&P 500 energy index was the sole decliner among the 11 S&P 500 sectors, falling 1.16% as crude prices sank about 4% following Saudi Arabia's price cuts and a rise in OPEC output.

Market expectations for at least a 25 basis-point rate cut as soon as March decreased from 88.5% to 63.8% over the week, according to CME's FedWatch Tool. The U.S. dollar and Treasury yields eased as investors awaited two critical inflation readings this week — consumer price index (CPI) for December and producer price index (PPI) — that will provide insights into the Federal Reserve's future rate cut plans. Expectations include projections for lower inflation, income, and spending over the next several years, according to a New York Federal Reserve report. As stock investors anticipate quarterly results from major banks like JPMorgan Chase, the markets are poised for potential shifts based on the outcomes of these inflation indicators.

Data for Technical Analysis (5H) CFD US30 DJIA

Resistance : 35180.4, 35192.1, 35211.1

Support : 37606.2, 37584.2, 37548.5                   

5H Outlook

Source: Investing.com                                  

Buy/Long 1 If the support at the price range 37516.2 - 37606.2 is touched, but the support at 37606.2 cannot be broken, the TP may be set around 37683.9 and the SL around 37471.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 37677.6 - 37767.6, TP may be set around 37810.0 and SL around 37561.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 37677.6 - 37767.6 is touched, but the resistance at 37677.6 cannot be broken, the TP may be set around 37590.5 and the SL around 37813.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 37516.2 - 37606.2, TP may be set around 37480.0 and SL around 37722.0, or up to the risk appetite.       

Pivot Points Jan 9, 2024 02:18AM GMT