USA100 (NASDAQ) – Stocks Rise Ahead Of Today’s Inflation Reading!
The NASDAQ increases in value for a fourth consecutive day as investors price in a rate cut for September. On Wednesday, the price of the index rose 1.05%, but the bullish price movement will depend on today’s inflation reading. Investors are anticipating a decrease in inflation, but if this expectation is not met, it could result in downward pressure. However, if inflation does decline to 3.1% or lower shareholders are less likely to sell shares ahead of earnings season. As a result, the bullish trend is potentially likely to continue.
The September cut scenario has become the main outcome due to the rise in unemployment and the change in the tone of the Federal Reserve. Earlier this week the Fed Chairman said the employment sector is showing signs of weakening while yesterday the Fed Governor advised inflation will reach the target without the Unemployment Rate rising much further. The lower interest rates support the economy but also makes bonds and the US Dollar less attractive.
Only 25% of the NASDAQ’s 100 stocks declined on Wednesday which applied minimal pressure. The bullish price movement was largely driven by the top 8 most influential stocks which all rose in value. These 8 stocks make up 49.08% of the whole index. The only stocks which applied minor pressure were Netflix which fell 1.18% and Intuit, down 2.70%. The two stocks hold a weight of 3.08%.
One of the stocks which have significantly supported the NASDAQ in 2023 and 2024 so far is NVIDIA. According to leading analysts, the company’s quarterly report is set slightly later than its main competitors. This could provide an advantage and an opportunity to improve its performance. KeyBanc Capital Markets have raised the target price from $130 to $180. They attribute this to higher-than-expected demand for GB200 graphics processors, particularly the more expensive NVL72 configuration, which is gaining more interest compared to the previously popular NVL36. Wolfe Research LLC has also adjusted its price target from $125 to $150.
Currently the price is trading within a symmetrical triangle meaning the price shows a lower high but a higher low. Volatility is likely to remain minimal until the US Consumer Price Index. If the Consumer Price Index reads as expected and the price increases, traders should be cautious that profits are not hit, and the price retraces. In the medium to longer term, the price remains above the 75-Period EMA and 100-Period SMA. This indicates buyers are controlling the market. Based on price action, buy signals are likely to materialize again if the price rises above $20,697.40.
XAUUSD – Gold Gains Momentum, Capitalizing on the Weaker Dollar!
The price of Gold has benefited from the lower price of the US Dollar and the pricing of an interest rate cut by September. The commodity is forming higher highs and higher lows, which is a positive sign, but traders should note retracements are quick and large, meaning caution is wise.
Another positive sign is the price of Gold is currently performing better than all other currencies within the market. However, investors will largely be monitoring the US Dollar which is currently declining 0.08%.
A weaker US Dollar has the potential to support the price of gold; however, if inflation falls significantly below current expectations, it may undermine gold’s bullish price action. This is because gold is also used as a hedge against inflation. According to the Fibonacci retracement levels, buy signals will form if the price breaks above the $2,381.62 levels.
Michalis Efthymiou
Market Analyst
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