NAS100 Rallied After the Fed Signaled More 2024 Cuts than Previously Expected
NAS100 Analysis
The US Fed kept rates unchanged at 5.25%-5.5% on Wednesday and lowered its 2024 median rate to 4.6% (from 5.1% previously), implying at least three rate cuts or 90 basis points worth [1]. Officials adopted a more dovish approach, as they have already delivered a massive amount of tightening, inflation "has eased" and jobs gains "have moderated" [2]. The already higher market expectations were bolstered by the outcome, now pricing in 175 basis points of cuts next year, according to CME's FedWatch Tool. [3]
NAS100 extended its gains as a result, trying to set new record highs (16,770). The tech-heavy index heads towards the conclusion of a banner year, fueled by anticipation for Fed cuts and the Artificial Intelligence revolution. Its facilitator for instance, Nvidia, has seen mindboggling growth to its top and bottom lines and its stock. These themes can continue to propel the index higher as we move into 2024.
However, the central bank did not take further tightening off the table, as Tuesday's CPI report showed persistence in price pressures, the labor market remains tight and the economy is very strong. Chair Powell acknowledged that inflation is "still too high", warning that officials "still have a ways to go" and declaring victory would be "premature". Although he did not push against the aggressive market pricing, the 175 bps cuts expectation seems excessive and is far from the Fed's projections, leaving room for disappointment. [4]
Given the overbought conditions, there is scope for a NAS100 pullback towards 16,178, but further losses that would endanger the EMA200 (at around 16,760) looks hard.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 14 Dec 2023 https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20231213.pdf | |
| Retrieved 14 Dec 2023 https://www.federalreserve.gov/monetarypolicy/files/monetary20231213a1.pdf | |
| Retrieved 14 Dec 2023 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html | |
| Retrieved 04 May 2024 https://www.youtube.com/watch |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.