Nasdaq 100 and S&P500: Tech Earnings Ignite Rally, Fed Hints at Rate Cut

Market Rallies on Tech Earnings and Fed Signals

S&P 500 futures rose Thursday as investors digested strong earnings reports and the Federal Reserve’s latest policy stance. The market’s positive momentum follows a robust session where the S&P 500 gained 1.6%, its best performance since February.

At 13:14 GMT, Dow Futures are trading 41160.00, up 87.00 or +0.21%. The S&P 500 Index is at 5587.50, up 29.50 or +0.53% and the Nasdaq-100 Index is trading 19596.75, up 91.50 or +0.47%.

Meta Platforms Leads Tech Sector Gains

Meta Platforms surged 8% in premarket trading after beating second-quarter expectations and providing an optimistic outlook. This performance underscores the tech sector’s continued strength in driving market gains.

Mixed Earnings Landscape

While tech shines, other sectors show mixed results. Hershey’s shares dropped 7% after missing analyst projections, with the company citing reduced consumer discretionary spending. Amazon’s stock rose 2% ahead of its earnings report, while Etsy dipped slightly on mixed results.

Federal Reserve Signals Potential Rate Cut

Fed Chair Jerome Powell indicated a possible rate cut at the September meeting if economic data supports easing inflation. This stance has bolstered market sentiment, with Fed funds futures showing an 86% probability of a 25 basis point cut in September.

Labor Market Indicators

Recent data presents a complex labor market picture. Initial jobless claims rose to 249,000, the highest since August 2023. Simultaneously, unit labor costs increased by only 0.9% in Q2, below expectations. July saw the highest announced layoffs for the month since 2020, totaling 25,885.

Market Forecast

Despite recent volatility, the bull market appears poised to continue. Bank of America maintains an optimistic outlook on equities, viewing recent pullbacks as consolidation rather than a trend reversal. With tech earnings beating expectations and the Fed signaling a potential rate cut, the short-term forecast leans bullish, supported by strong corporate performance and accommodative monetary policy expectations.

Technical Analysis

E-mini Nasdaq-100 Index futures may have turned an important corner on Wednesday when it crossed to the strong side of pivot at 19178.50. This level is new support.

Nonetheless, it still faces headwinds at the resistance cluster formed by the 50-day moving average at 19727.46 and the short-term pivot at 19742.25. The latter is also a trigger point for an acceleration to the upside.