Nasdaq 100, Dow Jones, S&P 500 News: Small-Caps Shine as Major Indexes Take a Breather

Highlights

• Tech stocks’ fall disrupts market’s upward trend
• Small-cap resilience fuels rally hopes
• Fed’s rate policies central to market speculations

Market Outlook Dampens After Hot Streak

US stock futures edged lower in Tuesday’s pre-market session, signaling a pause in the recent surge of major averages. Dow Jones Industrial Average futures fell slightly to 36237.00, marking a 0.09% decrease, while S&P 500 and Nasdaq-100 futures also experienced marginal drops.

Tech Stocks Lead Decline

Monday’s regular trading saw the Nasdaq Composite decline by 0.8%, largely influenced by a downturn in major tech companies. Notably, Nvidia and Intel fell 2.7% and 3.2%, respectively, contributing to the pullback after five weeks of consecutive gains. The S&P 500 and Dow Jones also slipped, albeit less significantly.

Small-Cap Stocks and Market Rally Hopes

Contrasting the broader market, small-cap stocks, particularly the Russell 2000, showed resilience with a 1% gain. This trend, coupled with a near 7% increase over the past month, has fueled optimism for a wider market rally. Investors are hopeful about a potential rate cut from the Federal Reserve next year, despite recent hawkish statements from the central bank.

Treasury Yields and Federal Reserve Speculations

U.S. Treasury yields saw a decline on Tuesday as the market anticipates job data that could hint at the economy’s trajectory and the impact of the Fed’s monetary policies. The 10-year Treasury yield dropped to 4.2509%, with the 2-year yield also decreasing. Market speculation is rife about the Fed’s forthcoming decisions, especially regarding interest rate policies, with many investors expecting unchanged rates in the upcoming meeting.

Short-Term Forecast and Economic Data

Investor expectations for equity gains into 2024 should be moderated, given the high-interest-rate environment, weakening consumer sentiment, and subdued earnings forecasts. Stocks are likely to remain within a narrow trading range.

Meanwhile, Wall Street is set to focus on upcoming economic reports, including the Job Openings and Labor Turnover Survey, ISM services industry data, and job-related figures, which may offer deeper insights into the economy’s health.

Technical Analysis

The E-mini Nasdaq-100 Index is showing mixed signals in its current technical setup. The current daily price of 15794.50, slightly below the previous close of 15869.00, indicates a minor retreat. This price sits above both the 200-day and 50-day moving averages, at 14472.54 and 15266.81 respectively, suggesting an overarching bullish trend in the medium to long term.

However, its proximity to the minor support level at 15717.75 indicates a near-term caution, as any break below this could lead to further declines.

The minor resistance at 16203.25 serves as an immediate ceiling, capping potential upward movements.

The current setup, balancing between key support and resistance levels with a price above longer-term moving averages, hints at a cautiously bullish market sentiment, but with a need for vigilance against potential downturns.