NASDAQ Index, SP500, Dow Jones Forecasts – Stocks Soar As Traders Prepare For Rate Cuts

Key Insights

• SP500 moved above the 4700 level as traders focused on dovish Fed. 
• NASDAQ rallied as federal funds rate projection for 2024 was changed from 5.1% to 4.6%. 
• Dow Jones tested the 37,000 level amid a broad rally in the equity markets. 

SP500

SP500 rallied as traders reacted to Fed Interest Rate Decision and Powell’s comments during his press conference. Fed left the federal funds rate unchanged and changed the federal funds rate projection for 2024 from 5.1% to 4.6%. During the press conference, Powell noted that he always felt that recession could be avoided when inflation was cooling off. According to Powell, this is what is observed now, although success is not guaranteed. Powell also said that the federal funds rate is at or near the peak in the current cycle. Fed is ready to discuss the timing and the pace of rate cuts. Not surprisingly, Powell’s comments triggered a strong rally in the equity markets as traders have started to prepare for rate cuts in the first half of 2024.

From the technical point of view, SP500 is moving towards the nearest resistance at 4730 – 4750. RSI is in the extremely overbought territory, so the risks of a pullback are increasing.

NASDAQ

NASDAQ  tested new highs as traders focused on dovish Powell. The yield of 10-year Treasuries declined towards the 4.00% level, providing additional support to major indices.

In case NASDAQ settles above the resistance at 16,400 – 16,500, it will head towards the next resistance at $16,750 – 16,800.

Dow Jones

Dow Jones gained strong upside momentum amid a broad rally in the equity markets. At this point, Fed policy outlook is the key catalyst for stocks, so traders hit the buy button as they prepare for more aggressive rate cuts in 2024.

Dow Jones is overbought, which is natural during a strong rally. The risks of a pullback are rising, but RSI remains below December highs, so there is enough room to gain additional momentum.

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