Nasdaq Index, Dow Jones, S&P 500 News: Tech Stocks Fall as Yields Rise

Key Points

• Wall Street indexes open lower, tech stocks decline
• Treasury yields rise, Fed rate cut timing uncertain
• Market anticipates key inflation data for rate direction

Performance of Major Stocks and Indexes

Wall Street’s main indexes, including the S&P 500 and Nasdaq Composite, opened lower on Tuesday. The decline is attributed to rising U.S. Treasury yields impacting megacaps, as traders reassess expectations for early interest rate cuts. Notably, tech giants like Unity Software, Netflix, and Apple experienced declines, while Juniper Networks surged following acquisition news.

Treasury Yields and Fed Rate Cut Speculations

U.S. Treasury yields have risen, with the 10-year Treasury yield climbing to 4.03% and the 2-year yield reaching 4.379%. This increase reflects investor concerns ahead of key inflation data releases. Despite the Federal Reserve’s expectation of three interest rate cuts this year, the market remains uncertain about the timing and frequency of these cuts, with a 58% chance of the first cut in March.

Upcoming Economic Reports and Market Reaction

Investors are focusing on the upcoming December consumer price index and producer price index, which are crucial in determining the Fed’s monetary policy direction. The outcome of these reports is eagerly awaited for indications on the likelihood of rate cuts.

Expert Opinions and Economic Data

AJ Oden of JPMorgan Private Bank expresses optimism for equities, particularly in the technology sector, by year-end. Additionally, small business sentiment, as reported by the National Federation of Independent Business, shows a slight improvement but remains below the long-term average.

Short-term Market Outlook

The market is cautiously evaluating the potential impact of upcoming economic data on interest rates. This week’s inflation reports are critical in shaping investor sentiment and the direction of Wall Street indexes. The focus remains on balancing these data points with Treasury yield movements and Federal Reserve expectations.

Technical Analysis

The E-mini Nasdaq-100 Index is currently trading at 16698.00, which is above both the 200-day moving average of 14975.86 and the 50-day moving average of 16084.82. This positioning above the key moving averages indicates a bullish trend in the medium to long term.

The index is also trading above the main support level of 15717.75, further reinforcing the bullish sentiment.

Overall, the market sentiment for the E-mini Nasdaq-100 Index, considering its position relative to key moving averages and support levels, leans towards bullish. The focus remains on whether it can sustain this upward momentum in the absence of clear resistance levels.

If the downward pressure were to continue over the near-term then the 50-day moving average at 16084.97 would be the most logical target.