NASDAQ Index, SP500, Dow Jones Forecasts – SP500 Tests Historic Highs On Dovish Fed

SP500

SP500 tests historic highs as traders stay bullish after Fed’s decision to cut the federal funds rate by 50 bps. The dovish Fed served as the key positive catalyst for stocks in today’s trading session. Traders also focused on the Initial Jobless Claims report, which indicated that 219,000 Americans filed for unemployment benefits in a week. Existing Home Sales declined by 2.5% month-over-month in August, while analysts expected that they would increase by 0.9%. This report did not have any impact on market dynamics as traders remained focused on Fed policy outlook. Today’s rally was broad, and most market sectors moved higher. Utilities and Consumer Defensive stocks found themselves under pressure as demand for safe-haven assets declined.

Traders should note that RSI is in the overbought territory, so the risks of a pullback are increasing. However, there is some room to gain additional upside momentum in the near term as RSI is below this year’s peaks.

NASDAQ

NASDAQ rallied as traders rushed to buy tech stocks after Fed decision and Powell’s comments. Tesla, which is up by 6.8%, is the biggest gainer in the NASDAQ index today.

The nearest resistance level for NASDAQ is located in the 20,000 – 20,100 range. In case NASDAQ manages to settle above the 20,100 level, it will head towards the next resistance at 20,700 – 20,800.

Dow Jones

Dow Jones tested new highs amid broad rally in the equity markets. The rally was led by Salesforce, which gained 5% amid rising demand for tech stocks. Boeing  was trading near yearly lows as the company has started to furlough thousands of employees amid strike.

RSI has recently moved into the overbought territory, but there is enough room to gain additional upside momentum in case the right catalysts emerge.

For a look at all of today’s economic events, check out our economic calendar.