Nasdaq 100, Dow Jones, S&P 500 News: Pressured by Cooling Consumer Sentiment

S&P 500 Falls as Consumer Sentiment Cools but Heads for Weekly Gain

The S&P 500 fell on Friday, pulling back from record highs due to a decline in consumer sentiment. However, the index, along with the Nasdaq Composite, is poised to finish the week higher, driven by optimism over cooling inflation. The S&P 500 and Nasdaq Composite have risen by 1.3% and 2.7% respectively this week, each reaching new highs.

At 14:57 GMT, the Dow Jones Industrial Average is trading 38440.89, down 206.21 or -0.53%. The S&P 500 Index is at 5417.09, down 16.65 or -0.31% and the Nasdaq-100 Index is trading 17662.12, down 5.44 or -0.03%.

Economic News

The University of Michigan’s Survey of Consumers revealed a drop in consumer sentiment, with the index falling to 65.6 in June from 69.1 in May, below the expected 71.5. Wholesale inflation decreased by 0.2% last month, contrary to predictions of a 0.1% increase, while the consumer price index remained flat for May. Furthermore, import prices dropped by 0.4% and export prices by 0.6%, indicating a broader pullback in inflation.

Market Movers

Adobe shares surged nearly 15% after strong fiscal second-quarter results and an upbeat annual revenue forecast, driven by demand for its AI-powered software. Conversely, shares of Caterpillar, Carnival, Norwegian Cruise Line, and United Airlines weighed on the S&P 500. Nine out of eleven S&P 500 sectors saw declines, with industrials leading the losses at 1.8%. Broadcom continued its ascent with a 2.2% rise following a positive forecast and stock split announcement.

Federal Reserve Insights

Outgoing Cleveland Fed President Loretta Mester commented on the current state of monetary policy, suggesting it is well-positioned to manage economic risks. She indicated a preference for seeing more positive inflation data before considering rate cuts. Despite the central bank’s recent projections for a single rate cut this year, market expectations lean towards multiple cuts by year-end.

Market Forecast

While the recent cooling in consumer sentiment and economic data have triggered a short-term pullback, the S&P 500 and Nasdaq remain on a strong footing for weekly gains. The potential for easing Fed policy continues to support the market’s bullish sentiment. However, caution remains regarding the sustainability of this rally amid possible recession risks in the latter half of the year. Traders should watch for further inflation data and Fed signals for guidance on market direction.

Technical Analysis

E-mini Nasdaq-100 Index futures are modestly higher. The tech-weighted index is trading inside yesterday’s range, suggesting investor indecision and impending volatility.

Although we don’t expect a change in the short-term trend, we can build a case for a near-term correction. Based on the 18501.00 to 19950.00 range, its pivot at 19925.50 is a potential target.

Taking out 19950.00 will signal a resumption of the uptrend, however, there is always the possibility of a closing price reversal top. This pattern won’t change the trend, but it could trigger a short-term break.