Tech Stocks Break Out
The Nasdaq has broken out to fresh, all-time highs today on the back of the latest US economic data yesterday. The ADP employment figure showed that private payrolls slowed in May, printing 152k, down from 188k previously and below the 173k figure the market was looking for. The data has seen USD trading lower ahead of tomorrow’s headline NFP data with traders now bracing for a weaker figure.
US Jobs Data Key Near-Term
A great deal of focus is being put on the data on the back of the recent drop in inflation readings (CPI and PCE both cooled last month). The market has started to tentatively lift pricing for a September rate cut, offering support to stock prices. If tomorrow; data shows fresh weakness in the labour market (which would mark a second consecutive monthly drop) this would see September rate-cut pricing moving higher still, lending further support to stock prices. The most bullish outcome for the Nasdaq tomorrow would be a drop in the NFP, a move higher in the unemployment rate and a move lower in wage growth. Wage growth in particular will be key tomorrow given the importance of inflation-linked data currently.
Bearish Risks
The obvious near-term risk for tech stocks is if jobs data comes in above forecasts tomorrow. Many Fed officials recently have cited the need to maintain rates at current levels for longer and any bullish data will be seen as endorsing this view, leading USD higher again and weighing on stocks.
Technical Views
Nasdaq
The rally in the Nasdaq off the bull channel lows has seen price breaking out above the 18.912.17 level. With momentum studies turning higher, focus is on a continued upside move with a test of the bull channel highs the next resistance to note. To the downside, 18,406.68 remains key support to note.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.