U.S. Futures Signal Concerns Amid Tech Rally

U.S. futures signaled a lower start on Monday, driven by concerns about the staying power of an artificial intelligence-driven tech rally and the potential delay in Federal Reserve interest rate cuts. Traders awaited key economic data releases and corporate earnings scheduled for later in the week.

The previous week's AI-fueled rally had driven Wall Street indexes to record peaks. However, profit-taking and anxiety ahead of crucial inflation readings led to a pullback. Despite the S&P 500 and Dow Jones Industrial Average reaching fresh record closing highs, the Nasdaq Composite experienced a modest dip. The S&P 500 had seen gains in 15 of the past 17 weeks, a rare feat reminiscent of 1989, according to Deutsche Bank.

Chip designer NVIDIA's strong forecast the previous week contributed to the AI-driven tech rally, propelling Dow and S&P to new highs. Google-parent Alphabet stumbled after announcing plans to relaunch its AI tool, while Berkshire Hathaway dipped due to concerns related to a U.S. government lawsuit against its power company, PacifiCorp.

The fourth-quarter corporate earnings season neared its end, featuring mixed performances. Zoom Video Communications rose 12% after strong earnings, while Unity Software sank nearly 19% on business exits.

Cryptocurrency-related stocks rallied alongside a more than 4% rise in Bitcoin, driven by ongoing demand for the Bitcoin-spot ETF approved the previous month and an upcoming halving event.

The dollar traded weakly on Tuesday as markets awaited crucial U.S. economic data signaling the potential timing of Federal Reserve interest rate cuts. Inflation will be a key focus this week, with the release of January's personal consumption expenditures (PCE) price data expected to provide insights. Sticky price gains in the U.S. economy diminished expectations of imminent rate cuts, with New York Fed President John Williams cautioning against early cuts.

The upcoming week features various economic readings, including core durable goods orders, ISM manufacturing PMI, new and pending home sales, consumer confidence reports, state economic activity reports, and a revised reading on fourth-quarter GDP.

Retailers like Lowe's, Macy’s, TJX, and Best Buy are set to release quarterly earnings, providing insights into consumer spending amid a shifting focus from earnings to the monetary policy outlook. Investors hope for a "soft landing," where the Fed can cool inflation without disrupting growth. Hence, the entire U.S. stock market could experience an impact, as there remains a slight possibility of a downturn due to the uncertainty surrounding economic data at this time.

Data for Technical Analysis (30Min) CFD US 500 [S&P 500]

Resistance : 5067.7, 5068.9, 5070.7

Support : 5064.1, 5062.9, 5061.1                  

30Min Outlook

Source: Investing.com                                          

Buy/Long 1 If the support at the price range 5059.1 - 5064.1 is touched, but the support at 5064.1 cannot be broken, the TP may be set around 5067.7 and the SL around 5057.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 5067.7 - 5072.7, TP may be set around 5075.0 and SL around 5062.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 5067.7 - 5072.7 is touched, but the resistance at 5067.7 cannot be broken, the TP may be set around 5062.9 and the SL around 5075.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 5059.1 - 5064.1, TP may be set around 5055.0 and SL around 5070.0, or up to the risk appetite.       

Pivot Points Feb 27, 2024 02:00AM GMT