Nasdaq 100, Dow Jones, S&P 500 News: Mixed Economic Signals Cloud Market Outlook Ahead of Fed Meet

Market Movements Before Federal Decision

The Nasdaq and S&P 500 experienced declines on Wednesday, influenced by disappointing results in the chip sector and mixed economic data. This comes as investors exhibit caution ahead of the Federal Reserve’s impending decision on interest rates.

At 15:56 GMT, the Dow Jones Industrial Average is trading 37922.48, up 106.56 or +0.28%. The S&P 500 Index is at 5020.55, down 15.14 or -0.30% and the Nasdaq 100 is trading 15593.46, down 64.37 or -0.41%.

Economic Data and Market Reactions

U.S. private employment figures from the ADP National Employment report indicated a stronger-than-expected increase in April. Conversely, manufacturing data showed a contraction, and input prices for factories neared a two-year peak. These contrasting reports have created a backdrop of uncertainty as the Federal Reserve convenes. The anticipation is for the Fed to maintain interest rates, moving away from earlier predictions of aggressive rate cuts following unsatisfactory inflation figures.

Corporate Earnings Influence

In the corporate arena, notable losses were seen with Advanced Micro Devices and Super Micro Computer, whose earnings did not meet market expectations, particularly in the burgeoning AI chip sector. This led to a broader downturn in the Philadelphia Semiconductor Index, which saw a reduction of 2.4%.

Sectoral Impacts and Individual Performers

While the tech sector faced setbacks, Amazon and Johnson & Johnson posted gains, the latter following the announcement of progressing towards a substantial legal settlement. The information technology sector was among the most impacted, recording a near 1% decline.

Broader Market Sentiment

The broader market sentiment was mixed, with more stocks advancing than declining on both the NYSE and Nasdaq. However, the number of new lows outpaced new highs, especially on the Nasdaq, highlighting ongoing investor hesitancy.

Market Forecast

Looking ahead, May is expected to be a pivotal month for the equity markets, as the first-quarter earnings season continues and clearer interest rate directives emerge from the Fed. Investors should prepare for potential volatility, with a cautious view towards sectors recently underperforming, particularly in technology and healthcare. While the outcome of the Fed’s meeting might stabilize some nerves, the undercurrent of economic data suggests a continuation of market recalibration rather than a sharp turnaround.

Technical Analysis

The short-term and intermediate trends are down ahead of the Fed announcement.

The 50-day moving average at 18147.18 is resistance and the 200-day moving average at 16819.50 is support.

The short-term range is 17113.25 to 17949.00. Its 50% level at 17531.25 is the pivot controlling today’s price action.