NASDAQ Index, SP500, Dow Jones Forecasts – Stocks Rebound From Session Lows As Traders Bet On Rate Cuts

Key Insights

• SP500 found support below 4750 and rebounded towards 4770 as traders remained focused on dovish Fed after the release of inflation reports. 
• NASDAQ moved away from session lows amid strong demand for AI-related stocks. 
• Dow Jones settled back above the 37,600 level. 

SP500

SP500 is losing ground as traders react to inflation reports. Inflation Rate increased from 3.1% in November to 3.4% in December, compared to analyst consensus of 3.2%. Core Inflation Rate declined from 4% to 3.9%, while analysts expected that it would decrease to 3.8%. FedWatch Tool indicates that there is a 65.2% probability that Fed will cut the federal funds rate by 25 bps at the meeting in March. Thus, markets expect that Fed will start cutting rates soon despite higher-than-expected inflation. These expectations explain why SP500 has quickly rebounded from session lows. Traders remain focused on dovish Fed and believe that inflation data is not a problem.

From the technical point of view, SP500 received strong support below the 4750 level and quickly moved towards the 4770 level. A move above 4770 will push SP500 towards the 4800 level.

NASDAQ

NASDAQ has also managed to rebound from session lows as traders used the pullback as an opportunity to increase their long positions in tech stocks. NVIDIA tested new highs today amid strong demand for AI-related stocks.

If NASDAQ settles back above the resistance at 16,750 – 16,800, it will head towards the next resistance at 16,950 – 17,000. RSI is in the moderate territory, so there is plenty of room to gain additional momentum.

Dow Jones

Dow Jones also rebounded from session lows, although the majority of its components remain under some pressure. Boeing is among the biggest losers in the Dow Jones index today as traders worry that 737 MAX 9 problems would hurt the financial performance of the company.

Currently, Dow Jones is moving towards the nearest resistance at 37,750 – 38,000. A move above 38,000 will signal that Dow Jones is ready to gain additional momentum.

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