NASDAQ Index, SP500, Dow Jones Forecasts: Mixed Earnings Boost Rate Cut Chances as US Indices Surge

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Updated: Jan 16, 2024, 16:02 GMT+00:00

Mixed earnings and lower inflation raise the chance of a Fed rate cut to 79.5%, sparking optimism in S&P 500 and Nasdaq.

In this article:

DOW

-0.05%

S&P 500

+0.67%

Key Insights

Mixed bank earnings offset lower inflation, increasing chances of a Fed rate cut in March to 79.5%.
S&P 500 and Nasdaq saw significant weekly gains, while Dow Jones fell due to UnitedHealth’s decline.
S&P 500 Index showed a subtle uptick, trading at $4783.84, positioning it just above the pivotal point at $4,766.

Quick Fundamental Outlook

U.S. stocks are consolidating amid mixed earnings and unexpected declines in producer prices, increasing the likelihood of a Fed rate cut in March to 79.5%. While services prices remained stable, the divergence in inflation indicators is significant. On Tuesday, the stock market retreated as investors scrutinized bank earnings reports. JPMorgan Chase, Citigroup, and Bank of America delivered mixed results, marking the start of the earnings season.

Focus remained on the banking sector, with Goldman Sachs reporting strong fourth-quarter revenue due to robust equity sales and trading, contrasting with Morgan Stanley’s profit decline due to charges.

Tesla’s stock fell after CEO Elon Musk expressed concerns about expanding in artificial intelligence and robotics without more voting control. Investors also awaited insights from Fed Governor Christopher Waller’s speech, while hawkish comments from European Central Bank officials impacted rate cut expectations.

SPX SP500 Price Forecast

SPX SP500 – Chart

The S&P 500 (SPX) on January 16 presented a modest uptick, trading at $4783.84, marking a 0.08% increase. This subtle rise positions the index just above the pivot point at $4,766, highlighting a potential transition into bullish territory.

Resistance levels are set higher at $4,795, $4,819, and $4,844, which could serve as key targets if the market maintains its upward trajectory. Support levels are at $4,738, $4,716, and $4,680, providing a safety net against any downward fluctuations.

The 50-Day Exponential Moving Average (EMA) at $4,746.72 and the 200-Day EMA at $4,622.00 support buying trend. An ascending triangle pattern is currently in play, with resistance extending at $4,795, suggesting potential for continued upward movement.

In conclusion, the SPX shows a bullish trend above the $4,766 mark, indicating a positive outlook for the near term.

Dow Price Forecast

Dow jones – Chart

On January 16, the Dow Jones Industrial Average (DJIA) showed a slight decline, closing at 53.35, marking a 0.36% decrease. However, it remains above the crucial pivot point at $52.76, suggesting potential changes in market sentiment.

This level is vital for traders, as surpassing it could signal a shift towards a bullish outlook. Key resistance levels are at $53.95, $54.65, and $55.58, potentially hindering further upward movement. Immediate support stands at $51.88, with additional support at $50.82 and $49.92, providing potential stability or reversal zones.

Technical indicators, including the 50-Day Exponential Moving Average (EMA) at $54.05 and the 200-Day EMA at $52.92, play significant roles in influencing the index’s trajectory.

The current upward trendline on the chart suggests the possibility of a buying trend above $52.76, indicating potential uptrend continuation for the DJIA if it maintains its position above this pivotal point.

NASDAQ Price Forecast

NASDAQ – Chart

On January 16, the NASDAQ index trading at $14,972.76, showing a slight uptick of 0.07%. Key levels to watch include a pivotal point at $15,051 and immediate resistance levels at $15,155, $15,360, and $15,527. These levels are critical for confirming a stronger bullish trend. Conversely, support levels at $14,800, $14,639, and $14,486 provide potential safety nets in case of a pullback.

Technical indicators reveal the 50-Day Exponential Moving Average (EMA) at $14,838 and the 200-Day EMA at $14,434, indicating a mild bullish sentiment. However, a challenging downward trendline around $15,050 presents a hurdle.

The index’s movement above or below this level will dictate its near-term direction. Currently, a bearish outlook persists below $15,050, while breaching this level could signal a bullish trend.

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About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.