Tech and Semiconductor Rally Lifts U.S. Markets Amid Economic Uncertainty

U.S. equity markets climbed on Monday, driven by rallies in megacap technology and semiconductor stocks, as investors shrugged off weak consumer confidence data and rising Treasury yields. The Nasdaq and S&P 500 posted their third consecutive gains, bolstered by Nvidia, Broadcom, and Qualcomm. Broadcom jumped 5.5% after strong earnings and guidance, while Qualcomm rose over 3% following a favorable court ruling. The Dow Jones also edged higher, supported by gains in technology, healthcare, and energy sectors, signaling resilience despite macroeconomic uncertainties.

Thin trading volumes ahead of the Christmas holiday amplified the influence of large-cap stocks, with the "Magnificent Seven"—Meta, Tesla, and Amazon—leading the rally. Optimism persisted as markets entered the historically bullish “Santa Claus Rally” period, which has averaged gains of 1.3% over the last trading days of December and the first two of January. Analysts suggested investors were holding positions to capitalize on seasonal strength rather than locking in losses for tax purposes.

Outside technology, Eli Lilly jumped nearly 4% after FDA approval of its weight-loss drug Zepbound, while Walmart fell 2% following regulatory scrutiny over fees charged to delivery drivers. Crypto-related stocks experienced volatility—Rumble surged 81% after securing a $775 million investment from Tether, but Bitcoin-linked stocks fell as the cryptocurrency declined.

However, underlying economic concerns lingered. U.S. Treasury yields surged to seven-month highs, with the 10-year yield reaching 4.59%, reflecting investor adjustments to the Federal Reserve’s more cautious outlook. The Fed projected only two rate cuts in 2025, down from four previously expected, citing persistent inflation risks despite recent data showing cooling trends. The PCE price index, a key inflation measure, rose just 0.1% in November, offering some relief but still above the Fed’s 2% target.

Consumer confidence weakened in December, highlighting uncertainties around business conditions and economic growth. Analysts noted that rising bond yields and tighter Fed policies could weigh on equity markets if inflation pressures persist. Nevertheless, tech stocks continued to dominate, with semiconductor shares leading gains as investors remained optimistic about AI-driven growth.

While investors recalibrated expectations for Fed rate cuts and inflation trends, analysts remained cautiously optimistic. Many viewed recent market activity as a reflection of broader 2023 trends, where tech and AI-driven sectors outperformed despite macroeconomic challenges. As markets head into the final trading days of the year, seasonal optimism and strong earnings reports may sustain momentum, although rising yields and economic uncertainties could cap gains.

Data for Technical Analysis (1D) CFD US30 DJIA

Resistance : 43005.9, 43126.8, 43322.6

Support : 42614.3, 42493.4, 42297.6                        

1D Outlook          

Source: TradingView         

Buy/Long 1 If the support at the price range 42214.3 - 42614.3 is touched, but the support at 42614.3 cannot be broken, the TP may be set around 43113.7 and the SL around 42114.3, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 43005.9 - 43405.9, TP may be set around 44000.0 and SL around 42514.3, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 43005.9 - 43405.9 is touched, but the resistance at 43005.9 cannot be broken, the TP may be set around 42601.2 and the SL around 43505.9, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 42214.3 - 42614.3, TP may be set around 41712.0 and SL around 43105.9, or up to the risk appetite.       

Pivot Points Dec 24, 2024 03:39AM GMT