NAS100 to New Records on Apple AI and US CPI, Despite One-Cut Fed

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NAS100 Analysis

The generative Artificial Intelligence arms race is heating up as Nvidia accelerated its cadence, while AMD and Intel are stepping up. The euphoria was reinvigorated this week, as Apple finally unveiled its AI suite [1], with markets hoping it will lead to an upgrade cycle and boost sales that have contracted for five of the past six quarters.

Wednesday's data showed that price pressures cooled and the disinflation process has not totally stalled, as headline CPI inched lower to 3.3% and 3.4% y/y respectively. However, this was not enough to sway the Fed away from its higher-for-longer narrative. Officials now see just one rate cut this year (from three previously), jacked up the longer-run rate and raised their inflation projection for this year and the next. [2]

Chair Powell did not sound particularly hawkish though and downplayed not only the upgraded inflation forecast as "just a slight element of conservatism", but also strong payrolls saying that the may be "a bit overstated" [3]. Markets have not adjusted to Fed's one-cut projection, as CME's FedWatch Tool currently assigns the highest probability to tow cuts this year, staring in September. [4]

The AI boom shields Wall Street from the Fed's cautious approach on lowering rates and despite the shallower projected path, Chair Powell did not sound too hawkish. NAS100 set new all-time highs and now has the opportunity to tackle the 20K mark. On the other hand, the Fed's higher-for longer can constrain the momentum of a move that looks highly stretched. As such, we could see a pullback below 19,000, but daily closes below the EMA200 that would challenge the bullish bias don't look easy.

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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

1

Retrieved 13 Jun 2024 https://www.youtube.com/watch

2

Retrieved 13 Jun 2024 https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240612.pdf

3

Retrieved 13 Jun 2024 https://www.youtube.com/watch

4

Retrieved 15 Jul 2024 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

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