Sentiment around the technology sector is improving, with the Nasdaq100 (US100) trading more than 0.6% above 19500 points today, supported by expectations of a Fed rate cut and still solid data from the US economy. Today, the index could see a fair amount of volatility between 1:30 PM BST and 2:15 PM BST, when US retail sales and industrial production data will be known. In the former case, the market expects a slight weakening relative to July, while a positive surprise could be met with an equally positive reaction from the stock market. In the case of manufacturing, investors expect a slight recovery.
- Momentum on the Nasdaq 100 was supported by Microsoft's announcement today that it will raise its dividend and approve a new $60 billion share buyback; shares are gaining nearly 2% ahead of the Wall Street session. Dell shares also gained more than 2%
- Intel announced a deal with Amazon Web Services, causing the company's shares to post more than 7% gains in pre-opening trade and likely to open above $22 per share. As a result, we see better sentiment in the semiconductor sector today; Broadcom, among others, is gaining.
It seems that the scenario of a 50 bps rate cut is electrifying investors' imagination today, while data from the US (yesterday's NY Fed) is quite solid. On the other hand, however, the readings may prompt Powell to make a somewhat smaller and more conservative 50 bps cut. A Bank of America FMS survey indicated that investor sentiment is improving ahead of the first policy easing in the US since 2020. The market expects the bigger the cut to be, the better given the continuation of the cycle, and BofA FMS indicated a rebound in sentiment for the first time since June.
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The index is breaking out above the 23.6 Fibonacci retracement and the medium-term exponential moving averages.
Source: xStation5
The US100 index defended the declines at the 23.6 Fibonacci retracement of the 2022 upward wave at 18400 points, and has since managed to rebound by about 1,000 points. Currently, contracts are breaking out above the 50-session average, suggesting possible upward momentum for the technology benchmark and a test of 20000 points, in the scenario of a positive reaction to tomorrow's Fed decision. Today, elevated volatility may be observed before and at the opening of the stock market, due to the publication of retail sales and industrial production.
Source: xStation5
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