Bessent's Treasury Nomination Boosts Optimism Amid Tech Slowdown

Despite a positive market performance on Friday, investors continued to shift towards cyclical stocks and away from technology. The Dow Jones outperformed, rising nearly 1%, while the S&P 500 and NASDAQ saw more modest gains. The market’s focus remains on inflation and the Federal Reserve’s stance on rate cuts.

Asian stocks rose alongside U.S. equity futures on Monday, while the dollar weakened as bond yields dropped following Scott Bessent’s nomination as U.S. Treasury Secretary. Investors saw Bessent, a prominent fund manager, as a potential advocate for markets in Washington. U.S. futures gained after President-elect Donald Trump’s announcement, reflecting optimism about expansionary policies under his leadership, though gains were limited by declines in tech stocks. Sentiment was further boosted by reports of a potential ceasefire between Israel and Hezbollah.

Bessent, known for advocating gradual tariffs, tax reforms, deregulation, and debt reduction, will prioritize tax cuts and trade policies as Treasury Secretary. His background includes working with George Soros and Jim Chanos, and he has pushed for economic policies to spur growth and bank lending. His nomination reassures markets, as the Treasury Secretary role is crucial for economic management, financial regulation, and international relations. Following the nomination, the dollar dropped 0.6%, and Treasury yields fell, signaling market relief.

Regarding individual stocks, Phillip Securities downgraded Nvidia from "Buy" to "Accumulate," citing recent price movements, though they raised the company's price target slightly to $160. Nvidia's strong performance in Q3 2024 and positive data center sales outlook were noted. Apple is seen as a strong investment by Bernstein analysts, with a bull case price target of $290, driven by its ecosystem and AI integration potential. Analysts also forecasted growth from Apple's accelerated product replacement cycle starting in 2026.

Bank of America analysts highlighted the positive impact of Nvidia's strong results on Taiwan Semiconductor Manufacturing (TSMC), noting robust demand for AI and the company's efforts to address production bottlenecks. Meanwhile, Super Micro Computer (SMCI) saw its stock surge after taking steps to avoid delisting, with analysts predicting a potential short squeeze. Analysts also upgraded Hewlett Packard Enterprise (HPE) to "Strong Buy" due to optimism about its AI server business, forecasting substantial growth in its AI sales through 2026.

The "Trump trade" continues to influence market activity, with investors profiting from bets on the dollar and crypto, especially Bitcoin, which has surged 50% since early October. However, sectors such as clean energy, a focus of Trump’s policies, have underperformed, with clean energy ETFs falling nearly 14%. Despite these trends, growing concerns about stock valuations and geopolitical risks may dampen enthusiasm for Trump-driven trades in the near future.

This week, attention is on key economic indicators, particularly the PCE price index, which could influence future interest rate decisions, and the retail sector as Black Friday kicks off the holiday shopping season, offering a glimpse of how shoppers are managing higher prices. Last week, two major retailers presented contrasting earnings results: Walmart raised its annual sales and profit forecast for the third consecutive time, while Target's shares dropped sharply after it projected weaker-than-expected sales and profits for the holiday quarter. Other retailers, including Best Buy, Macy's, Nordstrom, and Urban Outfitters, are also set to release earnings soon.

Data for Technical Analysis (1D) CFD US30 DJIA

Resistance : 44521.5, 44542.9, 44577.7

Support : 44451.9, 44430.5, 44395.7                          

1D Outlook

Source: TradingView                

Buy/Long 1 If the support at the price range 44271.9 - 44451.9 is touched, but the support at 44451.9 cannot be broken, the TP may be set around 44537.4 and the SL around 44181.9, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 44521.5 - 44701.5, TP may be set around 44755.0 and SL around 44361.9, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 44521.5 - 44701.5 is touched, but the resistance at 44521.5 cannot be broken, the TP may be set around 44446.4 and the SL around 44791.5, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 44271.9 - 44451.9, TP may be set around 44136.0 and SL around 44611.5, or up to the risk appetite.       

Pivot Points Nov 25, 2024 07:30AM GMT