Tech Optimism Keeps Markets Near Highs as Fed Meeting Looms

U.S. stock index futures remained steady on Sunday evening as investors exercised caution ahead of this week’s Federal Reserve meeting. Wall Street is seeking clarity on the central bank’s plans for interest rates, especially after recent economic data indicated persistent inflation, which could limit the scope for further rate cuts. Despite recent middling sessions, major indexes remain near record highs achieved earlier in December, driven by optimism around artificial intelligence (AI) and strong performances from technology stocks and chipmakers like NVIDIA and Broadcom.

On Friday, the S&P 500 ended flat at 6,051.09 points, while the NASDAQ rose 0.1%, and the Dow Jones fell 0.2%. Analysts remain optimistic about sustained market gains, with Goldman Sachs forecasting a 7% rise in the S&P 500 to 6,500 points by 2025, supported by positive small business sentiment and increased positioning in cyclical stocks over defensives. However, risks remain due to stretched valuations and elevated inflation expectations tied to President Donald Trump’s potential trade policies.

The technology sector continues to dominate market momentum. NVIDIA is expected to unveil its new "Rubin" chip at the March GPU Technology Conference, with analysts projecting its stock could reach $160-$170. Meanwhile, Apple’s AI-driven product updates and expanding services segment are expected to drive growth through fiscal 2027. Similarly, Amazon’s innovations in generative AI, particularly its Trainium2 chip and Bedrock platform, are seen as key growth drivers for AWS, with a 21% revenue growth forecast for FY25.

However, challenges persist for some tech players. Advanced Micro Devices (AMD) faces competitive pressure from NVIDIA and other chipmakers, leading to reduced market share projections in the AI sector. Bank of America recently downgraded AMD, citing limited growth prospects in the PC processor market. Adobe, too, has encountered headwinds, with slowing growth trends and strategic shifts leading to a lowered growth forecast for 2025.

As the Fed meets this week, a 25 basis point rate cut is anticipated, bringing total cuts in 2024 to 100 basis points. However, the market’s focus is on the Fed’s long-term rate plans amid sticky inflation and labor market resilience, with traders pricing in a high likelihood of unchanged rates in January.

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

Resistance : 6057.2, 6058.3, 6059.9

Support : 6054.0, 6052.9, 6051.3             

30Min Outlook

Source: TradingView

Buy/Long 1 If the support at the price range 6050.0 - 6054.0 is touched, but the support at 6054.0 cannot be broken, the TP may be set around 6058.4 and the SL around 6048.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 6057.2 - 6061.2, TP may be set around 6063.0 and SL around 6052.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 6057.2 - 6061.2 is touched, but the resistance at 6057.2 cannot be broken, the TP may be set around 6054.0 and the SL around 6063.2, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 6050.0 - 6054.0, TP may be set around 6048.5 and SL around 6059.2, or up to the risk appetite.       

Pivot Points Dec 16, 2024 09:33AM GMT