SP500 gained strong upside momentum as traders reacted to inflation data. Inflation Rate increased from 2.7% in November to 2.9% in December, in line with analyst expectations. Core Inflation Rate declined from 3.3% to 3.2%, compared to analyst forecast of 3.3%. The surprising decline in Core Inflation Rate served as the key bullish catalyst for stocks today. Traders also had a chance to take a look at NY Empire State Manufacturing Index report for January. The report showed that NY Empire State Manufacturing Index decreased from 2.10 to -12.60, compared to analyst consensus of +3. This report had minimal impact on market dynamics as traders focused on inflation reports. The rally was broad, and all market sectors moved higher in today’s trading session.
SP500 has recently climbed above the resistance at 5910 – 5920 and is trying to settle above the 5950 level. In case this attempt is successful, SP500 will move towards the next resistance level at 6000 – 6010.
NASDAQ rallied, supported by inflation data. Treasury yields pulled back, providing additional support to riskier assets. Tesla, which was up by 6.8%, was among the best performers in the NASDAQ index today.
Currently, NASDAQ is trying to settle above the resistance at 21,150 – 21,200. If NASDAQ manages to settle above the 21,200 level, it will move towards the next resistance level, which is located in the 21,550 – 21,600 range.
Dow Jones is up by more than 1.5% amid broad rally in the equity markets. The rally is led by Goldman Sachs and American Express.
Dow Jones is trying to settle above the nearest resistance at 43,300 – 43,400. A move above the 43,400 level will open the way to the test of the next resistance at 44,000 – 44,100. It should be noted that RSI is in the overbought territory, so the risks a of pullback are increasing.
For a look at all of today’s economic events, check out our economic calendar.
Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.